Loan Payment Formula

If we borrow $150,000 for 30 years at 8 per cent annual percentage rate. What is the monthly payment?
1) The rate would be 8 divided by 1,200
which equals .0066666666...
2) The months would be 12 × 30 = 360.
3) So the monthly Payment would be:

.0066666666 .0066666666 + ((1.0066666666 ^360)-1) × $150,000
4) The middle section of the equation is the most difficult to solve so we will calculate that first.

(.0066666666) ÷ ((1.0066666666 ^360)-1) =
(.0066666666) ÷ (10.935729397036 -1) =
(.0066666666) ÷ 9.935729397036 =
0.0006709790897
5) "Plugging" this into the rest of the equation we have:
(.0066666666 + 0.0006709790897) × $150,000 =
(0.007337645756) × $150,000 =
$ 1,100.65
Aren't you glad you have the Loan Calculator to use instead of this method?

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