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Path: utzoo!watmath!clyde!floyd!harpo!seismo!hao!hplabs!intelca!t4test!murray
From: murray@t4test.UUCP (Murray Lane)
Newsgroups: net.misc
Subject: Calculating loan payments
Message-ID: <313@t4test.UUCP>
Date: Fri, 17-Feb-84 15:39:05 EST
Article-I.D.: t4test.313
Posted: Fri Feb 17 15:39:05 1984
Date-Received: Thu, 23-Feb-84 06:05:07 EST
Organization: Intel, Santa Clara, Ca.
Lines: 28

I have seen several articles here and there (most recently in net.sources
(what an odd place)) asking how to calculate monthly installment loan 
payments. I wrote a program some years back that does exactly that (in
Pascal) and (logicly enough) had to find out how to do the calculation.
The following formula does it, It is quite accurate (the last payment
always leaves a balance of $0.00 +/- $0.01). I have compared it against
loans I have received from lending institutions and the numbers come
out the same if you add in some fudge factors (extra charges the bank
hides in your payment (cost of setting up the loan, etc)). If anyone is
interested, I'll mail them the source, or if there is a lot of interest
(no pun intended), I'll post it to net.sources. In any case, don't be
in any hurry, we have terrible UUCP troubles here and only get on the
net about once a week.


		P=A((i(1+i)^n)/((1+i)^n-1))

	where P is the monthly payment;
	      A is the initial loan amount;
	      i is the monthly intrest rate (annual/12);
	 and  n is the number of months.

The balance can also be computed by the formula:

		B=A(1+i)^n-P(((1+i)^n-1)/i)

	where B is the remaining principal after n months.