The monthly cost of a $15,000 installment loan depends on your interest rate and repayment length. Without that information, it’s impossible to know how high monthly payments would be.
Suppose you qualify for a $15,000 personal loan with a 25% APR and a repayment period of two years. Your monthly payment would be $800.57! Knowing how much your monthly loan payment ends up being can help you choose the best loan offer. For example, if an $800.57 monthly payment is too high, you can get smaller payments by borrowing less money, extending the repayment period, or searching for a lower interest rate.
To calculate your monthly payments, you can use a loan payment calculator online or crunch the numbers yourself. The formula to calculate monthly payments is A = P {[r(1+r)n ]/ [(1+r)n-1]}.
A stands for the amount of your monthly payment. P represents the principal balance, also known as the total amount you borrow. R is the annual interest rate divided by 12 months. And N is the loan term expressed in months. While intimidating, below are detailed steps on how to easily determine your monthly loan cost per month.
First, convert the interest rate percentage to a decimal and the years to months to calculate payments manually. A 25% APR would be 0.25, and a two-year repayment length is 24 months. Now you must divide your APR by 12 to calculate your monthly interest rate. The answer would be 0.0208333 or 2.0833%.
When you input the installment loan data from above into the formula, your calculation should look like this: A = 15,000 [(0.0208333 x 1.020833324) / (1.020833324 – 1)].
To start calculating the math, work from left to right. If you do not have a calculator, you can simply copy and paste the formula into Google. To express an exponent, also known as the index or power, you can use the carrot symbol (^).
Your simplified formula should now look like this: A = 15,000 (0.034172/0.640272). And once you complete the calculation in the parenthesis, your formula should appear as A = 15,000 (0.053371).
Now that the complicated math is out of the way, you can do one final calculation to get an answer of $800.57! While there are online calculators, it’s always helpful to know how to do the necessary math on your own. Knowing how much you will pay each month on a personal loan can help you alter your repayment terms to fit your existing budget.
Account & Loan Repayment