How do you calculate a monthly payment of a loan based off of the loan amount and interest rate?

Question

For example, if I take out a loan for $20,000, at an interest rate of 7.00% and want to pay it off in 4 years ... how do I calculate my monthly payment? (is their an equation / method used?)

Thanks!

Answer 1

There is no equation that can tell you monthly amortizing loan payments. There are calculators or programs that will do this for you though (they work off of huge table that were developed through trial and error, believe it or not).

Here is a good one:

http://www.bankrate.com/gookeyword/mortgage-calculator.asp

Answer 2

confident they are going to pay much less for hte vehicle because of the fact, something over the fee gets utilized to theory and then the subsequent month's interest fee is in line with a decrease theory quantity so, even paying 25 a month extra can fairly pay off. in the event that they are in a position to pay yet another hundred a month in spite of this, they are going to fairly keep a set. endure in ideas that interest is amassed on a regular basis so, in the event that they make 2 money a month then the overage won't all bypass to theory so, to get the main important bang for the dollar they should make the fee + extra interior the comparable fee. returned, make beneficial there is not any penalty for paying it off early.

Answer 3

In MS Excel, there is a formula button to input your terms to calculate the payment.

Your example is $478.92

Here is the formula:

=PMT(.07/12,48,20000,0,0)

Your actual payment may vary due to specifics from the bank/lending institution, but this gives you a close estimate.