how do i calculate monthly payments (ie. math formula), knowing principle/interest rate?

Answer 1

First you must define some variables to make it easier to set up:

P = principal, the initial amount of the loan
I = the annual interest rate (from 1 to 100 percent)
L = length, the length (in years) of the loan, or at least the length over which the loan is amortized.

The following assumes a typical conventional loan where the interest is compounded monthly. First I will define two more variables to make the calculations easier:

J = monthly interest in decimal form = I / (12 x 100)
N = number of months over which loan is amortized = L x 12

Okay now for the big monthly payment (M) formula, it is:


M = P x J/1-(1+J)^ -N

where 1 is the number one (it does not appear too clearly on some browsers)

So to calculate it, you would first calculate 1 + J then take that to the -N (minus N) power, subtract that from the number 1. Now take the inverse of that (if you have a 1/X button on your calculator push that). Then multiply the result times J and then times P. Sorry, for the long way of explaining it, but I just wanted to be clear for everybody.

The one-liner for a program would be (adjust for your favorite language):

M = P * ( J / (1 - (1 + J) ** -N))

So now you should be able to calculate the monthly payment, M. To calculate the amortization table you need to do some iteration (i.e. a simple loop). I will tell you the simple steps :

Step 1: Calculate H = P x J, this is your current monthly interest
Step 2: Calculate C = M - H, this is your monthly payment minus your monthly interest, so it is the amount of principal you pay for that month
Step 3: Calculate Q = P - C, this is the new balance of your principal of your loan.
Step 4: Set P equal to Q and go back to Step 1: You thusly loop around until the value Q (and hence P)
goes to zero.

Answer 2

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RE:
how do i calculate monthly payments (ie. math formula), knowing principle/interest rate?

Answer 3

I = P(1 + (r/12))^(12 * t)

So it all depends on time. Don't forget that "t" is in years. Also are you compounding monthly or yearly. If yearly, then use this formula

I = P(1 + r)^t

Answer 4

Google loan calculators. Take your pick. Most banks have one on their websites also.