Loan Payments Calculator

Here is the formula to calculate loan payments:

R = An · [

 i
----------------
1 - ( 1 + i ) - n		 ]

  An is the amount borrowed,
  R is the amount of the regular payment per period,
  n is the total number of payment periods
        (number of payment periods per year * number of years,
  i is the interest rate per period
        (annual interest rate written as a decimal ÷ number of periods per year )


An =

annual interest rate (as a decimal!!) =

number of payment periods per year =

number of years =

i =

n =


R =
 
Example: Suppose I want to borrow $20,000 at 4.5% annual interest to be paid back with monthly payments over 5 years. How much will my monthly payment be?
This is how you would put the values into the formula to work it out with a calculator:

R = 20,000 · [

 (.045 / 12 )
--------------------------------
1 - ( 1 + .045 / 12 ) - (12 * 5)		 ]
 
= $372.86 per month
 
If you enter the above numbers correctly on a calculator, you should get an answer for R of $372.86 per month

Try entering those numbers in the appropriate spaces in the box above, press the "Calculate" button, and see if you get the correct answer. You can use this calculator to practice problems and make sure you are evaluating them correctly on your calculator.
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Created on ... Nov 30, 2009

Last updated on ... Dec 3, 2009