1 Answers
You have to know what the interest rate is, how long the loan term is for, and the amount being borrowed. Make sure to use the monthly interest rate when calculating. Using the formula above, put in the amount being borrowed in the P variable, the monthly interest rate in the r variable, and the amount of total months the loan will be amortized for in the n variable. Work the innermost sections within the parentheses first. You can also plug these numbers into an online calculator to verify your math, or use an Excel spreadsheet, input a function (fx), select PMT, in the dialog box that comes up, plug in the interest rate, number of total months that the loan will need payments, and the total loan amount before interest to calculate the monthly payment.