This calculator will solve for any one of four possible unknowns: "Amount of Loan", "Total Scheduled Periods" (term), "Annual Interest Rate" or the "Periodic Payment".
Enter a '0' (zero) for one unknown value.
The term (duration) of the loan is a function of the "Total Scheduled Periods" and the "Payment Frequency". If the loan is calling for monthly payments and the term is four years, then enter 48 for the "Total Scheduled Periods". If the payments are made quarterly and the term is ten years, then enter 40 for the "Total Scheduled Periods".
Normally you would set the "Payment Method" to "Arrears" for a loan. This means that the monies are lent on one day and the first payment isn't due until one period after the funds are received.
If the first payment is due on the day the funds are available, then set "Payment Method" to "Advance". This is typical for leases.
The "Amortization Method" should be set to "Normal" (level payments) unless you have a specific reason to set it to another method. &Fixed Principal" causes the amount allocated to principal to be the same each period which result in decreasing payments.
Update 01/07/2013 (BETA): Changed technology used which is both faster and more reliable (fixed "Can't calculate result" problem that some people experienced). Please let us know of any problems — contact us
Update 08/10/2012: New!: Added the ability to print a payment schedule. Added charts to visualize a loan's cash flow and interest cost.
This is a general purpose loan calculator. You can calculate the payment, amount, interest rate or term (number of payments) at different payment and compounding frequencies.
Please click on the above "Help" button for details.
You can calculate a loan's "nominal annual interest rate" which is the rate usually quoted by the lender. Use the calculator for confirming the quoted rate. (Just enter a "0" for annual rate.) A discussion of the calculation used to arrive at the nominal annual interest rate, is beyond the intent of this web page. Suffice it to say, it is involved. The "periodic interest rate" is the interest rate for a period — that is, the time between two scheduled payments. The formula for the periodic interest rate is very straight forward.
General Periodic Interest Rate Equation:
Periodic Rate = Annual Rate / Periods Per Year / 100
Example of common periods per year: Annually: 1, Monthly: 12, Weekly: 52 and Daily: 365.
Payment = PV * (Periodic Rate / (1 - (1 / (1+
Periodic Rate))Total Periods))
S = Pmt * (1.0 + Periodic Rate * Timing)
Term = Log(S / (Periodic Rate * -PV + S)) /
Log(1.0 + Periodic Rate))
If the first payment is due on the day the loan amount is advanced then timing is set to 1. If the first payment amount is due after the funds are made available, then the timing value is 0.
A = (1-(1+Periodic Rate)(- Total Periods+Type) )
/ Periodic Rate
A = Pmt * ( Type + A )
These days the housing market, in the US, is very weak, and mortgages can be hard to get for those with less than perfect credit. You find yourself in the position where you want to retire, sell your home and move away. You have found a prospective buyer but the buyer is having difficulty obtaining financing. In order to close the sale, you offer him owner financing. The terms for the loan are for an initial mortgage balance of $365,000, payable over fifteen years in 180 monthly payments and the interest rate will be 6.5%. What is the payment amount?
First, calculate the periodic rate.
Periodic Rate = 0.005416667 = 6.5% / 12 / 100
Payment = $3,179.54 = 365,000 * (0.005416667 / (1 - (1/
Now that you know the payment amount, you can check the accuracy of your calculation by solving for one of the other loan attributes.
S = 3,179.54188 = 3,179.54 * (1.0 + 0.0054167 * 0)
Term = 180.00018 = Log( 3,179.54 /
And the loan amount...
A = 114.796412 = (1-(1+0.0054167)(-180+0) ) / 0.0054167
Loan Amount = 364,999.78 = 3,179.54 * (0+114.796412)
You may wonder why the loan amount is not $365,000. The 0.22 difference is the rounding error. Because a payment amount is not exactly $3,179.54 (but we can't have a payment that includes a fractional cent) the loan amount will not calculate to be exactly $365,000 either.
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Time Value of Money