Can someone tell me what I'm doing wrong here?
If I have a $56,500 loan and the interest rate is 7.9% how much will I owe after 8 months?
I thought this would be fairly simple. I would compound the interest monthly:
After month one = 56500 * (1 + 0.079/12) After month two = (56500 * (1 + 0.079/12)) * (1 + 0.079/12) etc...
Since I'm doing this in Excel, I just refer to the month one cell in the month two formula. After 8 months - I have an answer of
$59,545. But the bank says I actually owe
I'm at a loss for how they got their number. I tried my calculations with the interest compounding daily:
After day one = 56500 * (1 + 0.079/365) After day two = (56500 * (1 + 0.079/365)) * (1 + 0.079/365) etc...
And I get an answer of
Which leads me to believe I'm doing it wrong. I'm trying to make calculations about the loan over the next 30 years and, as you can imagine, the margin of error I have in eight months extrapolated to 30 years is probably huge.
Can anyone tell me what I've done wrong?
Edit: the loan above is in the context of a Grad Plus Loan (a student loan that is currently in deferment). Perhaps that information will help.