How to Calculate a Motorcycle Loan
Unless you have enough cash on hand to purchase a motorcycle, you'll need to take out a loan. To calculate your monthly payments, you'll need to know the term of the loan, how much you have to borrow and the interest rate. Knowing the monthly payment will help you to better budget for the loan--and avoid taking out a loan you cannot afford.
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Instructions
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1
Determine the number of monthly payments you will make on your motorcycle loan by multiplying the number of years in the term of the mortgage by 12. For example, if you're taking out a three-year loan, you would multiply 3 by 12 to get 36.
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2
Convert the annual interest rate from a percentage to a decimal by dividing it by 100. For example, if the annual interest rate equals 7.98 percent, you would divide 7.98 by 100 to get 0.0798.
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3
Figure the monthly interest rate expressed as a percentage by dividing the annual interest rate by 12. In this example, you would divide 0.0798 by 12 to get 0.00665.
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4
Add 1 to the monthly interest rate expressed as a decimal from Step 3. In this example, you would add 1 plus 0.00665 to get 1.00665.
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5
Find the result from Step 4 raised to the negative Pth power, with P being equal to the number of payments during the loan. In this example, you would raise 1.00665 to the -36th power to get 0.787723998.
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6
Subtract the result from Step 5 from 1. Furthering the example, you would subtract 0.787723998 from 1 to get 0.212276002.
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7
Divide the motorcycle loan amount by the result from Step 6. In this example, if you borrowed $15,000, you would divide $15,000 by 0.212276002 to get $70,662.72155.
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Multiply the result from Step 7 by the monthly interest rate expressed as a decimal to calculate the monthly payment for your motorcycle loan. Completing the example, you would multiply $70,662.72155 by 0.00665 to find the monthly payment to be $469.91.
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References
- Photo Credit motorcycle image by Goran Bogicevic from Fotolia.com
