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As long as you know the principal, loan term and interest rate, you should be able to estimate your monthly payment — and the total interest you will pay. Use an auto loan calculator. Free ...
The formula for calculating your loan payment depends on whether you choose an amortizing or interest-only loan. Examples of amortizing loans include car loans, mortgages and personal loans.
Buying a car is a major financial commitment, and for most people, it involves taking out a loan. Along with the loan comes interest, which is the cost of borrowing money from a lender. Read Next:...
Note that the interest rate is commonly referred to as an annual percentage rate (e.g. 8% APR), but in the above formula, since the payments are monthly, the rate must be in terms of a monthly percent. Converting an annual interest rate (that is to say, annual percentage yield or APY) to the monthly rate is not as simple as dividing by 12; see ...
In 1935, Indiana legislators passed laws governing the interest paid on prepaid loans. The formula contained in this law, which determined the amount due to lenders, was called the "rule of 78" method. The reasoning behind this rule was as follows: A loan of $3000 can be broken into three $1000 payments, and a total interest of $60 into six.
The formula for EMI (in arrears) is: [2] = (+) or, equivalently, = (+) (+) Where: P is the principal amount borrowed, A is the periodic amortization payment, r is the annual interest rate divided by 100 (annual interest rate also divided by 12 in case of monthly installments), and n is the total number of payments (for a 30-year loan with monthly payments n = 30 × 12 = 360).
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