COMPUTING LOANS INVOLVING PARTIAL PAYMENTS BEFORE MATURITY

1. Raziel borrowed P20,000at 11% interest for 150 days. On day 50, Raziel made a
partial payment of P5,000. On day 80, she made a second payment of P7,000. What
is the final amount due on the loan?
PARTIAL PAYMENT TIME LINE:
Term of Loan
150 days

Loan Date
Maturity

Partial

Partial

Payment 1

Payment 2

Date
30 days
70 days
(80-50)
(150-80)
Day 0
Day 150

Day 0
Day 50
Less Partial Payment
New Balance
Day 70
Less partial payment
New Balance
Day 150

Day 50

Principal
20,000
20,000
b)
4,694.46
c)
15,035.56
15,035.56
e)
6,862.17
f) 8,173.39
8,173.39

Day 80

Interest

Total

a)
305.56

20,305.56
5,000

305.56
15,035.56
d)
137.83
137.83

174.82

15,173.39
7,000.00
8,173.39
g) 8,348.21

STEPS:
1. FIRST PARTIAL PAYMENT: DAY 50 (P5,000)
a. Compute the interest from the date of the loan to the partial payment.
Given: P = P20,000
r = 11%
t= 50 days
I = Prt = 20,000 (.11) (50/360) = 20,000 (.11) (0.138888888) =
P 305.56
b. Determine the partial payment to reduce the principal
Partial payment to principal
= Payment Interest Due

2
M OI Chap 1
= 5,000 305.56 = P 4,
694.46
c. Determine the adjusted principal:
New balance of P = Original amount partial payment
= 20,000 4,694.46 = P15,035.54
2. SECOND PARTIAL PAYMENT: DAY 80 (P7,000)
d. Compute the interest from the date of the first partial payment to the
second payment.
Given: P = P15,035.54
r = 11%
t= 30 days (80 50)
I = Prt = 15,035.54 (.11) (30/360) = 15,035.54 (.11)
(0.083333333) = P 137.83
e. Determine the partial payment to reduce the principal
Partial payment to principal
= Payment Interest Due
= 7,000 137.83 = P 6,862.17
f.

Determine the adjusted principal:

New balance of P = Previous Balance partial payment
= 15,035.56 6,8762.17 = P8,173.39

3. FINAL AMOUNT DUE ON DAY 150

g. Given: P = P8,173.39
r = 11%

t= 70 days (150 - 80 )

I = Prt = 8,173.39 (.11) (70/360) = 8,173.39 (.11) (0.194444444) =

P 174.82
F = P + 1 = 8,173.39 + 174.82 = 8,348.21
NOTE: If Raziel had repaid the entire loan after 150 days, her interest payment
would have been:
Given: P = P20,000
r = 11%
t= 150 days
I = Prt = 20,000 (.11) (150/360) = 20,000 (.11) (0.416666666)
= P 916.67

In making partial payments, Raziel paid a total interest of: P618.21

Thus, she has a savings of P298.46 (P916.67 - P618.21 = P298.46)