Annuity payments are perhaps the most popular way to pay off debt, which is accepted in modern banking practice. They are used in completely different loan programs: cash loans, car loans, loans to small and medium-sized businesses. Calculating annuity payments is quite simple - you need to know the mathematical formula.
Instructions
Step 1
To calculate the annuity payments, you need to know three things: - The initial loan amount;
- Interest rate;
- The number of periods of interest accrual. The first two indicators are obvious and do not require explanation. However, the number of periods for calculating interest needs to be sorted out. With a monthly loan repayment, the number of interest accrual periods will be equal to the number of months in the loan term. Therefore, for further calculation, the loan term is expressed in months.
Step 2
If you want to calculate the annuity payments for a specific loan that you are going to issue, then all the numbers listed can be found in the selected bank. You can also understand the formula and structure of annuity payments using an example of any conventional numbers. To calculate the annuity payments, plug in the amount, rate, and loan term into the following expression: P = SC? (i? (1 + i) ^ n) / ((1 + i) ^ n - 1), where P is the received payment amount,
SK - the loan amount, i - interest rate, n is the number of interest calculation periods.
Step 3
When doing your own calculation, keep two things in mind. First, the annual interest rate should also be converted to monthly and expressed in decimal places. Secondly, the payment calculated in the described manner may differ within a few rubles from the payment calculated by the bank. This is due to the fact that, for greater accuracy, the bank divides the annual interest rate not by 12 months, but by the number of days in the current year.
