Amortized Loan Payment Calculation
This calculator helps you determine the fixed monthly payments required to pay off a loan over a specified period of time. The formula for calculating monthly payments is based on the loan amount, interest rate, and loan term. The total amount of payments and interest are also calculated.
Formula Explanation
Monthly Payment Formula: P = (L * r * (1 + r)^n) / ((1 + r)^n - 1), where L is the loan amount, r is the monthly interest rate, and n is the total number of payments.
For example, if you borrow $100,000 at an annual interest rate of 6% for 10 years, your monthly payment would be calculated as follows:
Monthly interest rate = 6% / 12 = 0.005
Total number of payments = 10 * 12 = 120
Monthly payment = (100,000 * 0.005 * (1 + 0.005)^120) / ((1 + 0.005)^120 - 1) = $1,110.21
Total Payment and Interest
The total payment is simply the monthly payment multiplied by the number of months in the loan term, and the total interest is the difference between the total payment and the initial loan amount.