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amount financed = cash price - down payment

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Rosalinda Blick

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Q: What equation shows how installments loan are calculated?
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A man has a loan which he promised to pay in 18 equal monthly installments of P600. What are monthly installments for 8 months 10 months 12 months and 15 months?

The question can be answered only for the loan with zero interest. The loan is then 10,800 (18 x 600) that could also be paid by 1350 a month for 8 months 1080 a month for 10 months 900 a month for 12 months 720 a month for 15 months In the case the loan is not interest free the problem cannot be solved, since there are two unknown variables: a principal amount (an amount borrowed) and an annual interest rate and only one equation. For instance if you borrow 10,000 with 10% annual interest rate, the loan will be paid off in 18 monthly installments of 600, which corresponds to the question. For the same principal (10,000) and annual interest rate (10%) the loan would have been paid off in: 8 month installments of 1297; 10 month installments of 1046; 12 month installments of 879; 15 month installments of 712. But you can still have the loan with other pairs of principal and interest rate with 18 monthly installments of 600. There is a suitable Excel formula PMT too. Monthly installments can be calculated by formula: Monthly installment = Principal x {rate + (rate / [(1+rate)months - 1]} where rate = (annual rate / 12), i.e. 10% => 0,1/12


What is calculated by using a standard formula to show the cost of a loan?

annual percentage rate


What is a simple interest in math?

Simple interest is interest that is calculated only on the amount of unpaid principal on a loan. Such interest is not added to the value of the loan but is tracked separately. Compound interest is interest that is calculated on the total of unpaid principal and accumulated interest on a loan. The difference is in simple interest there is no interest charged on accumulated interest while in compound interest there is interest charged on accumulated interest.


What is the monthly interest payment on 10000 dollar loan for 3 years at 5 percent interest per month?

Assuming that the loan principal is paid off in equal installments AND the monthly payment is to be kept the same, the average simple interest paid per month for the loan may be computed as follows: $10,000 principal balance at time 0 months $0 principal balance at time 36 months ($10,000 + $0) / 2 = $5,000 average balance $5,000 is average balance throughout the period of the loan $5,000 x 5% per month = approximately $250 per month. However, the amount of REAL interest is different throughout the life of the loan.


The concepts of simple interest?

Simple interest is interest that is applied to the original amount for the whole period of the investment or loan. This is unlike compound interest where the interest received on an investment is re-invested, or the interest due on a loan is added to the loan outstanding if unpaid, and so itself gains interest. With simple interest on loans, it is often calculated that borrowing a certain amount for a number of years will be charged at a certain rate for the whole period; then at the end of the period of borrowing the original loan and all the interest are repaid at that moment. However, if monthly repayments are made, then part of the original loan as well as the interest for the month are repaid; this means that not all the loan is borrowed for the whole period and so the real [effective] rate of interest for the period is actually higher than the given rate as that given rate assumes no part of the loan is repaid until the very end.

Related questions

What equation represents how the interest on a loan is calculated?

Principal x rate x time


A man has a loan which he promised to pay in 18 equal monthly installments of P600. What are monthly installments for 8 months 10 months 12 months and 15 months?

The question can be answered only for the loan with zero interest. The loan is then 10,800 (18 x 600) that could also be paid by 1350 a month for 8 months 1080 a month for 10 months 900 a month for 12 months 720 a month for 15 months In the case the loan is not interest free the problem cannot be solved, since there are two unknown variables: a principal amount (an amount borrowed) and an annual interest rate and only one equation. For instance if you borrow 10,000 with 10% annual interest rate, the loan will be paid off in 18 monthly installments of 600, which corresponds to the question. For the same principal (10,000) and annual interest rate (10%) the loan would have been paid off in: 8 month installments of 1297; 10 month installments of 1046; 12 month installments of 879; 15 month installments of 712. But you can still have the loan with other pairs of principal and interest rate with 18 monthly installments of 600. There is a suitable Excel formula PMT too. Monthly installments can be calculated by formula: Monthly installment = Principal x {rate + (rate / [(1+rate)months - 1]} where rate = (annual rate / 12), i.e. 10% => 0,1/12


Which equation represents how the interest on a loan is calculated?

Interest=Principle times rate times time


Which equation represents how the interest on the loan is calculated?

Interest=Principle times rate times time


How do you divert the wrath of a legal loan shark?

Pay the installments in full when they are due.


What is a loan that is paid in equal monthly installments with a fixed interest rate?

installment credit


What is a payment calculator loan?

This Loan Payment Calculator computes an estimate of the size of your monthly loan payments and the annual salary required to manage them without too much financial difficulty.The loan calculator also assumes that the loan will be repaid in equal monthly installments through standard loan amortization.


What is a personal loan calculator used for?

Personal Loan calculator is used for calculating the monthly installments one has to pay after taking the Loan. It gives you clarity on the principal amount, interest rate and tenor. These installments are paid in the form of easy EMI i.e. Easy Monthly installments. Many Banks such SBI, PNB or IDBI and NBFCs like Bajaj Finserv / Tata Capital offers online calculator on their website.


What does the name emi mean?

Equated Monthly Installments: Hire, purchase, lease, or loan-repayment installments that are constant in amount, and are usually collected in advance as post-dated checks.


What is a loan that is paid in equal monthly installments with a fixed interest rate called?

installment credit


What is the meaning of loan amortization?

Amortization is A method for repaying a loan in equal installments. Part of each payment goes toward interest and any remainder is used to reduce the principal of the loan


What are loan seekers?

They are people who want to borrow money now and pay it back in installments over time.