For a loan of $100,000 at a rate of 6% for fifteen years, the payment is about $843 a month. For the same loan amount, at an interest rate of 7.5%, you must increase the life of the loan to keep the same payment. The term must extend over 18 years instead of 15 years.

Question

Mathematics

Hazel Frank

20 March, 12:04

For a loan of $100,000 at a rate of 6% for fifteen years, the payment is about $843 a month. For the same loan amount, at an interest rate of 7.5%, you must increase the life of the loan to keep the same payment. The term must extend over 18 years instead of 15 years.

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Kristian · Answer 1

For the same amount of loan and monthly payment

if the interest rate is 6%, the loan must last for 15 years

if the interest rate is 7.5% the loan must last for 18 years

So, the greater the interest rate, the longer the loan has to be paid.