Suppose you want to know how soon a client can repay a given loan at a maximum affordable monthly payment. To find out, open the Amortization window and do this:
1. Enter the Interest Rate and Loan Amount.
2. Pick a trial payment period.
3. Click the Go button.
4. The Amortization window now shows you the Monthly Loan Payment and the Total Monthly Payment. (The total monthly payment is equal to the monthly loan payment unless you have entered something in one or more of these fields: Extra Monthly Payment, Semi-Annual Tax, and/or Annual Insurance.)
5. If the Monthly Loan Payment is less than your client's maximum affordable total monthly payment, calculate the Extra Monthly Payment as:
(extra monthly payment) = (maximum total monthly payment) - (Monthly Payment)
6. Enter the extra monthly payment and click Go again.
7. The Amortization window now shows you the time necessary to pay back the loan at your client's maximum total monthly payment.
If the monthly payment in step (5) is more than your client's maximum total monthly payment, you need to check whether your client can ever pay back the loan. To determine this, check Editor (Full Schedule) for your destination and click Go again. PC Access computes the loan schedule, then shows you the detailed report in the Editor window.
Examine the Interest Payment column in the report. The first interest payment is a function of your loan principal and interest rate. Your client must be able to pay at least the first month's interest, or they will never be able to repay the loan.