This doesn't take into late fees or penalties. In this example, it cost about $3000 to make up for the one missed payment (to bring the balance back to the amount after the first payment). In the table, I summed the total payment and interest over the first 7 payments and highlighted the balance at the end of the 7th month in blue. 3, you end paying even more interest than you did on your first payment. The interest due is calculated as the Monthly Rate * Previous Balance, so on Payment No. In this example, the second monthly payment of a 30 year loan is skipped. The amortization table below illustrates how missing a payment results in interest added to the Principal (see the numbers highlighted red). The result of negative amortization is that you end up paying interest on your unpaid interest. Most definitions describe this as occurring when a payment is insufficient to cover the interest due, resulting in the interest being added to the loan balance. Negative Amortization is the increase in Principal through the addition of unpaid interest.
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