This free online loan amortization calculator will help you to find out your monthly interest payment and also determines out how much of your repayments will go towards the principal and how much will go towards interest.
Gather information you need to calculate the loan’s amortization:
Write down the formula: M = P * ( J / (1 - (1 + J)-N))
M = payment amount
P = principal, meaning the amount of money borrowed
J = effective interest rate. Note that this is usually not the annual interest rate; see below for an explanation.
N = total number of payments
Note the total number of payments N: if your loan term is 5 years and you have to make monthly payment, your N = 5*12=60
Calculate your effective interest:
Firstly, calculate interest rate,as decimal = 5/100 to get 0.05
Secondly find J = decimal interest rate / numbers of payment per year: e.g. 0.05/12 = 0.004167
Calculate (1+J)-N: First add 1+J, then raise the answer to the power of «-N.»
In our example, (1+J)-N = (1.004167)-60 = 0.7792
Calculate J/(1-(your answer)): n a simple calculator, first calculate 1 - the number your calculated in the previous step. Next, calculate J divided by the result, using the effective interest rate you calculated above for "J."
In our example, J/(1-(answer)) = 0.004167/(1-0.7792) = 0.01887
Find your monthly payment: multiply your last result by the loan amount P
We have already prepared an Excel formula — get access right now