Formula for recalculation of a bad loan, i.e. where payments were missed?
I need to know if exists any formula to calculate interest rate, principal interest, total amount to be paid, in the case of a bad loan.
Ex: In a bank exists a 20 year home - loan. The client was very correct for the first 5 years. He did not paid a cent for 2 years. Now he want to continue to pay. How is calculated the new interest for this loan?
I'm a software developer, so excuse me for the non professional language.
If this questions is asked before, can you refer me to the previous questions.
Thnx in advance.
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It sounds like there are no provisions in the loan document for how to proceed in this case. I would view this as creating a brand new loan.
The amount owed is going to be (Principal remaining + interest from 2 years + penalties). If you created a new loan for 13 years, that would not be how I would expect a lender to behave.
I would expect most repayment plans to be something like make double payments until you are caught up or pay an extra 00 per month until caught up and then resume normal payments.
There's not quite enough to answer the question in full.
For the two years of non-payment, were there any penalties, or just accrued interest? If no penalties, this is a 3 step time-value-of-money calculation.
First, take the terms of the loan and figure out the balance after 5 years.
Second, for two years, increase the balance by the monthly interest rate.
Last, calculate a new payment with a 13 year duration.
Excel or any business calculator can handle this.
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