Formula to calculate Equal Monthly Payments
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I want to figure out the formula in getting the following: $2500 loan amount 239.9961% APR 12 month term Bi-weekly payment (26 payment total) What is the formula for each payment? What is the formula for the Total Finance Charge? How can I calculate Bi-weekly equal payments?? We know that each payment will be $251.96 (Equal Payments) But how have they come up with such formula?? And where? HELP!?!?!?!?!
Victoria
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I want to figure out the formula in getting the following: $2500 loan amount 239.9961% APR 12 month term Bi-weekly payment (26 payment total) What is the formula for each payment? What is the formula for the Total Finance Charge? How can I calculate Bi-weekly equal payments?? We know that each payment will be $251.96 (Equal Payments) But how have they come up with such formula?? And where? HELP!?!?!?!?!
Victoria
I will assume that your $251.96 is paying both interest on the balance and part of the loan is repaid each month. So each each payment = interest + repayment I used to Excel and "Goal-Seek" to work out the nominal (annual) rate of interest, it is 234.214%. Therefore each bi-weekly payment (assuming 52 weeks in a year) is 1/26 x 234.214% which is 9.008% This is the interest part: so in first week interest is balance x 9.008% which is $225.206 Subtract this from $251.96 and you have the net repayment that month, $26.76. For bi-week 2, interest on the balance is now $2473.24 x 9.008% .. etc As to formulas I don't know if there is one, it's so long since I did all this stuff.. As you can see the interest is calculated monthly based on the remaining balance, and totals $4050.96
'Howard