How to Calculate a Business Loan Payment
When it comes to operating a business, there are certain times when you might want to get a business loan. Business loans can provide capital for things such as fulfilling payroll, designing products and buying raw materials to make product. Calculate a business loan so that you know how much money you're on the hook for before you sign on the dotted line.
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Instructions
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1
Input the amount of money you'd like to borrow for your business. This may be referred to as the principal or loan amount.
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2
Enter the amount of time for which your business wants to borrow the money. This amount is usually entered in months or years.
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3
Input the interest rate at which the money will be borrowed. This is the amount of money that the bank or lender will receive for lending you the money.
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4
Calculate the monthly payment. Once these three factors have been entered, then the payment can be calculated. As an example, try calculating a loan of $10,000 at 8 percent over the course of five years. This will yield a monthly payment of $202.76.
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Tips & Warnings
Paying just a little bit of extra money can greatly reduce the life of the loan. For instance, in the above example, paying just $25 extra per month can shorten the life of the loan by almost eight months.
If you'd like to manually calculate the loan payment the equation reads as follows: monthly payment = rate + [ rate / [[1 + rate ^ months] -1] x principal.
References
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