I need to reduce the interest rate of my purchase of 90,000 by 2%, with a minimum rate of 5%. How do I get an answer and what exactly do I do?
I need to reduce the interest rate of my purchase of 90,000 by 2%, with a minimum rate of 5%. How do I get an answer and what exactly do I do?
Is the $90,000 the cost of some item or a loan? At any rate, it sounds like you are being charged 7% on your $90,000 and they want you to reduce the interest by 2% to 5%. Now, if it is a loan, it would involve calculating a periodic payment, first at 7% and then at 5% to see the difference between the two rates. Then you could compare the actual interest difference between the two rates.
If the $90,000 is just the cost of an item, then by dropping the interest by 2%, it would simply save you: 2% X $90,000=$1,800 per year, which would be the difference between 7% @ $90,000=$$6,300 and 5% @ $90,000=$4,500. The defference being $6,300 - $4,500=$1,800, as calculated above.
If it is a loan, then that is a different matter altogether. You have to clarify your problem.
OK. It sounds then that the floor interest rate (the minimum) is 5%. Apparently, you can't go lower than that, which, as I stated in the first answer that the original interest rate was 7%. If that is the case, then I have shown you how much money you will save dropping the interest by 2%. And that is all there is to it, because there no mention of any principal being paid back.
