# Slide 4: How the BLOC Can Be Used

### Let's Look at Another Example

Let's say that you need to install new windows in your home. The cost for the windows and installation is $10,000.

You can get a home improvement loan through the window supplier to finance the cost at the following terms (sample only, actual terms may differ):

Loan Amount: $10,000

Fixed Rate: 7.50%

Repayment Term: 120 months

Monthly Payment: $118.70

The total amount of interest and principal paid over the 120-month term at 7.50%:

Total Payments $14,244 Total Interest Paid $4,244 Total Principal Paid $10,000

Month | Starting Balance | Monthly Payment | Interest | Principal | |

1 | $10,000.00 | $118.70 | $62.50 | $56.20 | |

2 | 9,943.80 | 118.70 | 62.15 | 56.55 | |

3 | 9,830.34 | 118.70 | 61.80 | 56.91 | |

4 | 9,773.08 | 118.70 | 61.44 | 57.26 | |

117 | 467.48 | 118.70 | 2.92 | 115.78 | |

118 | 351.70 | 118.70 | 2.20 | 116.50 | |

119 | 235.20 | 118.70 | 1.47 | 117.23 | |

120 | 117.96 | 118.70 | 0.74 | 117.96 | |

Total: | $14,244 | $4,244 | $10,000 |

#### In this Example

An amortization schedule is calculated that shows that the borrower must pay $118.70 each month for 120 months in order to meet the interest obligation and to pay down the borrowed amount to $0 over 10 years.

The interest charges for the first month is calculated as such:

$10,000 X 7.50% (divided by) 12 months = $62.50

In the first payment, the borrower pays the lender $62.50 in interest. The remaining amount of $56.20 will repay the loan and reduce the borrowed amount to $9,943.80.

The interest charges for the second month is calculated as such:

$9,943.80 X 7.50% (divided by) 12 months = $62.15

In the second payment, the borrower pays the lender $62.15 in interest. The remaining amount of $56.55 will repay the loan balance and reduce the borrowed amount to $9,830.34.

This will continue all the way through the 120th payment, where the borrower pays the lender $0.74 in interest. The remaining amount of $117.96 will repay the loan balance and reduce the borrowed amount to $0. The loan obligation has been paid off.