This post was inspired by a customer who asked us for some help solving a problem. We asked him if it was okay with him if we did a Money Blog post about a situation like his, and he said that would be fine. So here goes!
THE SCENARIO
I came across a note for sale. The terms of the note are as follows:
Original balance: $6,000
Unpaid balance as of June 2: $4,560
Term: 5 years
Interest Rate: 0
Payments: $100 per month
If I buy it, make the purchase on June 2, and the first payment I'll receive will be the July payment.
Every February, the borrower pays off $1,000 in order to accelerate the note paydown.
QUESTION
If the borrower continues to pay on his normal schedule (including the extra $1,000 every February), how much longer will he continue to owe the note's owner anything?
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