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what is the formula for calculating monthly loan payments. The formula used to calculate loan payments is exactly the same as the formula used to calculate payments on an ordinary annuity. To accomplish this divide your APR by 12 the number of months in a year.
P L c 1 cn 1 cn - 1. To calculate a loan payment amount given an interest rate the loan term and the loan amount you can use the PMT function. The formula used to calculate loan payments is exactly the same as the formula used to calculate payments on an ordinary annuity.
To accomplish this divide your APR by 12 the number of months in a year.
A is the amount of payment for each period. Personal loan monthly payment formula. The PV or present value portion of the loan. Because you are finding your monthly payment you need to reduce the APR to a monthly percentage rate.