How to calculate the installment of a loan
One of the biggest fears when applying for a loan, especially before a bank, is whether you will be able to repay the money on time.
This is even more important when property has been pledged.
To find out if you perro make that commitment, You must be able to calculate the fee to pay each month.
How is the loan fee calculated? Is it the same if it is a monthly or annual fee? In this article we will help you to know how to calculate this amount in different ways.
Cánido I Calculate the Installment of a Loan by Hand?
Among the options available to make calculations, and thanks to the creation of many smart programs and devices, perhaps one of the least chosen is the manual method, using pencil and paper.
But Much more is required to make this calculation than these instruments..
Especially to calculate the payment of each month.
In this sense we want to share the elabora used in this operation.
The interest percentage must be multiplied by the amount of the loan.
You would already have the first value.
The following operation is much more difficult, especially to solve it by hand.
The calculation is 1-(1+interest) raised to the number of months, placing it in the negative.
To understand it better we will assign an amount to each value.
The amount will be 20 million euros, the interest of 1% per month and the term of two years, or 48 months.
This would be the operation:
0.01×20,000,000 divided by 1-(1+0.01) 10 to at least 48.
The first operation gives 200,000.
Calculating this part by hand is very easy.
The second part gives 0.38.
Now divide the first result by the second: 200,000 / 0.38 and the result is 526,315.
That is the amount to be paid each month.
As you have surely noticed, the calculation is not easy, especially in the second part, so unless you have a great capacity for numbers, it is better to leave aside the option of calculating the loan installment by hand .
Also you perro do the first part by handand then use a calculator or other electronic means for the second part.
How to Calculate the Installment of a Loan without Programs?
The use of programs like Excel or afín make it very easy to do calculations.
But, there are also other options available to perform these calculations.
The best known and used is through banking institutions.
They have on their website loan simulators.
Thanks to this provision, the monthly amounts to be paid cánido be quickly calculated.
To make the calculation efficiently and accurately you must know 3 essential facts: the total amount of the loan, the interest to be paid and the term available for it.
Then, just entrar each one in the corresponding space and clic accept.
The amount to be paid in each installment will be displayed on the screen.
It is true that there are different ways to calculate a loan installment, even without having to use programs.
But thanks to the ease and speed that these offer, they have become an excellent tool to perform these mathematical operations.
How to Calculate the Installment of a Loan in Excel?
Calculating the loan installment in Excel is very fácil.
This is because this office tool already has a specific function for it.
You only need to know the 3 data related to debt.
It refers to the full amount of the loan.
It is the amount of time arranged to pay the entire loan.
It is the rate to be charged for the loan delivered.
Each of these data should be placed in Excel cells.
One in each cell.
Now, in a different cell, place the equal symbol agregado the word PAYMENT, open parentheses and then choose the interest cell, after a semicolon, select the term cell, and after a semicolon, choose the last cell of the values.
Assuming that the amount is in cell D5, the interest in D6 and the term in D7, the elabora would be as follows: = PAY(D6;D7;D5).
This elabora is very handy, especially since it perro be used no matter how loan values change.
This perro occur, for example, when the loan is with interest based on the remaining amount of the debt.
How to Calculate the Installment of an Annual Loan?
So far we have seen how to calculate the monthly payment of a loan, but if you want to calculate the payment of an annual loan, you will only have to change some details of the elabora.
The first thing is to calculate the number of installments to pay, which are usually expressed in months.
In case of being indicated in years, it should only be divided by 12.
The best option to calculate this fee is through Excel.
The elabora to use is = PAY(B5;B7;-B1).
The first value is the monthly interest, the second is the number of installments, and the third is the total amount of the loan.
Once these amounts are placed, you cánido see the amount to be paid each month.
Now you only have to multiply that amount by 12 and it will yield the annual amount to be paid.
How to Calculate the Installment of a Loan on Calculator?
Advanced calculators, known as scientific, are capable of performing difficult mathematical operations.
To do the calculation with one of them you only need 2 things, know the 3 basic data of the loan and the elabora of the operation.
The elabora is: interest x the amount of the loan.
This is divided by the result of 1(1+interest) raised to the number of months.
This last value is negative.
After knowing the values of each of the elements, we proceed to entrar them into the calculator.
You will be able to see the result very quickly.
To understand it better, we are going to assign a value to each data.
The amount of the loan will be 200,000, the interest of 1% and the term of 48 months.
You must entrar the following information into the calculator: 0.01×200,000 /1-(1+0.01) x10 to the power of minus 48.
Whatever the chosen means, it is always possible to know the amount to be paid as loan installments.
If the mentioned steps are followed, the result will be correct.
We hope you liked our article How to calculate the installment of a loan
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