I=PRT

When I was 21, I tutored a girl in high school algebra.  One evening, we worked on the interest formula.  I=PRT.  Pretty straightforward.  We reviewed it and the I asked her to calculate how much interest would be earned on $10,000 at 5% (annual rate) for a year.  She did some ciphering and announced that it would be $500,000.  I asked her if that sounded right to her, that you could deposit $10,000 in a bank for a year at 5% and get half a million from it a year later.  Blank stare.  I asked her to let me know if she ever opened a bank.

That story is only marginally related to my current tale.  We bought a car in March and when I got the first bill, I noticed that the payment was for higher than I expected by $2.20.  I know, no biggie, right, maybe it was because the first payment was six weeks after the purchase, so I just made the payment.  When the next bill came for the same amount, and the balance was $58 higher than I expected, I knew that there was a discrepancy somewhere.  I called the bank and confirmed the loan amount and interest rate.  The lady on the phone said that I would have to take it up with the dealership because they we're calculating the loan correctly based on a 61 month loan.  I was using 60 months.  Perhaps that was the difference.  But wait, if it really is 61 months the payment should be about $10 lower! This made the problem worse.

I re-checked my math, and created an amortization schedule to prove that the payment I calculated was correct to amortize the loan in 60 months (which is what I signed up for.)  Mustering all the voice I had, I called back and just asked them to send me an amortization schedule.  This would certainly flush out my (or their) calculation error.  "Sure," the agent said, "But there is a $20 fee for that."  I told her I would not pay a fee; but that I would get this problem fixed.   She transferred me to some other desk and this lady was just as clueless.  She confirmed the principal, the rate, AND the time, but told me their payment was correct.  It can't be.  Was this Jenny?  There has got to be something else going on.  Some hidden account maintenance charge or something.  She said that she would send me a "bill calculation" worksheet.  I hope that helps.

I know it isn't a lot of money, but the principle of it is maddening to me.  I mean, what is $150 over five years?  Well, that and possibly a 61st payment.  It is enough for me to get to the bottom of it.