📖 The story
Mr. Sawyer finances $28,000 over 5 years at a 4.9 % effective rate. He wants to know the monthly installment at which the loan is paid off at the end.
ℹ Ordinary installments, remaining debt zero at the end.
Topics › Leasing, Credit & Consumption › Monthly installment of a car loan
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Leasing, Credit & Consumption
Monthly installment of a car loan
Change any number and press "Calculate" – or use "Type in" on the right to watch it entered.
What you learn
The level loan installment contains interest and repayment – at the start the interest portion dominates, later the repayment. Those who understand this assess financing offers correctly.
In short: The level installment contains interest and repayment – at the start the interest portion dominates, later the repayment.
Formula
R = K0·q^n / ((q^n − 1)/(q − 1))
With the example numbers
R = 28.000,00 €·qn / ((qn−1)/(q−1)), n = 60 = 525,75 €
How to read the formula
The reverse pension question: from existing capital the payout is calculated that just uses it up over the term. Because the remaining capital keeps earning interest until the very end, the pension is higher than capital divided by months.
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