monthly payment loan calculator

Monthly Payment Loan Calculator

The most important factor to consider at the time of borrowing is the monthly payment. A Monthly Payment Loan calculator, therefore, can be an indispensable tool for borrowers as they can quickly and precisely calculate the monthly payments.

Being aware of monthly payments in advance helps borrowers to assess their income and analyze the feasibility of the loan. They can also compare different loans against each other.

Work Process: Monthly Payment Loan Calculator

Monthly payment calculators require any of the three loan factors to calculate the fourth one. The factors are:

• Loan amount (p)
• Loan duration (n)
• Interest rate (r)
• Monthly payment (a)

There are two main (and different) kinds of formula used by a monthly payment calculator. For monthly payment, the formula is: ‘P* r(1+r)n / (1+r)n -1’. For calculating interest rate, the formula is ‘2(n*a – p)/ n*p’. There are other calculators that compute the feasibility of taking a particular loan amount at the current salary. These calculators require:

• Sales tax
• Credit history
• Affordable monthly payment
• The desired duration of loan
• Monthly income
• Monthly expenditure

Excel is a Monthly Payment Loan Calculator Too!

Rather than looking for loan payment calculators online, a little practice with Excel can help you generate a customized loan payment calculator that can calculate the monthly payment and let you compare various loans in a workbook. To use Excel as a loan calculator you can take either of these two approaches: ·

Select a cell. From the top menu bar, click on ‘Insert’ and select the ‘Function’ option. Choose the ‘PMT’ function from the Function list. Type the principal amount, interest rate and the loan duration in the bracket to calculate the monthly payment. ·

Copy paste the following formula in the fourth, fifth and the sixth column of the first row ‘=A2*B2*(1+B2)^C2’, ‘=(1+B2)^C2-1’, ‘=D2/E2’. Ensure that you enter the principal, monthly interest rate and the number of months in the first three columns (strictly in that order) for the formula to work.

The advantage with Excel is its customizability. Besides being used as a monthly payment loan calculator, Excel can also be programmed to generate an amortization chart.

Monthly Payment Loan Calculator