A remaining balance is how much money is left to fully pay a bill.
Remaining balance is a financial term used to describe how much money is needed to pay off an account. The remaining balance can be positive or negative, depending on the type of account, and is equal to the amount of money needed to pay off the balance. If the balance is in a credit account, such as a car loan, this will represent a liability for the car buyer and will be a negative amount. If the balance is in a bank account or similar instrument, it represents an asset and will be a positive number. By paying the full amount of the loan or withdrawing the contents of a bank account, the holder could erase the remaining balance and liquidate the account.
By paying the full amount of the loan or withdrawing the contents of a bank account, the holder could erase the remaining balance and liquidate the account.
This financial concept can be used by anyone, from bankers to individuals. Homeowners and mortgage lenders use the remaining balance to describe the amount outstanding on a mortgage loan. Credit card companies may use remaining balance to describe a consumer’s total charges or the amount of available credit remaining in an account. Banks and other financial institutions also rely on this concept when conducting everyday business transactions or helping consumers understand their accounts.
To calculate the remaining balance, it is necessary to collect a variety of data. This includes the original balance or total amount borrowed, as well as the amount and frequency of payments on the account. This calculation also requires information about the interest rate and the length of the loan. Many financial institutions offer online calculators to help consumers calculate their remaining balance, while some include the balance on their monthly statements. This balance may also be listed as a refund amount or outstanding balance.
In an interest-free checking account, the remaining balance is equal to the total amount of money left in the account after clearing all checks and debits. There is no interest in arguing, this number is relatively easy to calculate. On an interest-bearing loan, the calculation can be more difficult. For example, consider a $10,000 US dollar (USD) car loan at 5% annual interest. After paying a total of $8,000 USD in payments, the buyer would have a remaining balance of well over $2,000 USD to account for remaining principal and interest.
This information can be very helpful to consumers and serve as a useful tool in financial planning. People who want to pay off debt or check their credit should check the balance of all credit and debit accounts. This balance can also be used to allow consumers to calculate how much interest they are paying and can encourage them to pay off loans faster or shop around for better deals. Knowing the remaining balance in an account can also help a loan holder determine when a car or home will finally be paid off.