How to Figure Out Monthly Payments With a 36 Month Loan
People borrow money for a variety of reasons, such as buying a home or a car, going on vacation, paying for school or any number of personal expenses. When you take out a loan, your lender typically sets a period for how long you will have to repay it. The interest rate and amount borrowed also affect the monthly payment. Calculating the monthly payment ahead of time helps you budget for how much you can afford to borrow.
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Instructions
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1
Divide the annual loan interest rate by 12 to find the monthly rate. For example, if the annual rate equals 6.06 percent, divide 0.0606 by 12 to get 0.00505.
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2
Add 1 to the monthly rate. Here, add 1 to 0.00505 to get 1.00505.
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3
Raise the Step 2 result to the negative 36th power because you make 36 loan payments. In this example, raise 1.00505 to the negative 36th power to get 0.834149618.
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4
Subtract the Step 3 answer from 1. In this example, subtract 0.834149618 from 1 to get 0.165850382.
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5
Divide the monthly loan rate by the Step 4 answer. Here, divide 0.00505 by 0.165850382 to get 0.030449131.
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6
Multiply the Step 5 answer by the amount of the loan to find the monthly payment. Completing the example, if you took out an $18,300 loan, multiply $18,300 by 0.030449131 to get $557.22.
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