Loan Payment Formula
Where rate = Annual Percentage Rate divided by 1200
For example, an 8 % annual rate becomes .0066666666666666…
Let’s suppose we want to borrow $150,000 for 30 years at 8 per cent annual percentage rate. What is the monthly payment?
1) The rate would be .0066666666…
2) The months would be 12 × 30 = 360.
3) So the monthly Payment would be:
……………………..………0066666666……
.0066666666 + ((1.0066666666 ^360)-1) × $150,000
4) The middle section of the equation is the most difficult to solve so we will calculate that first.
(.0066666666) ÷ ((1.0066666666 ^360)-1) =
(.0066666666) ÷ (10.935729397036 -1) =
(.0066666666) ÷ 9.935729397036 =
0.0006709790897
5) “Plugging” this into the rest of the equation we have:
(.0066666666 + 0.0006709790897) × $150,000 =
(0.007337645756) × $150,000 =
$ 1,100.65
| Where rate = Annual Percentage Rate divided by 1200 For example, an 8 % annual rate becomes .0066666666666666…Let’s suppose we want to borrow $150,000 for 30 years at 8 per cent annual percentage rate. What is the monthly payment? 1) The rate would be .0066666666… |
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| .0066666666 .0066666666 + ((1.0066666666 ^360)-1) × $150,0004) The middle section of the equation is the most difficult to solve so we will calculate that first. (.0066666666) ÷ ((1.0066666666 ^360)-1) = |