# Formula for calculating interest payments?

1. ## Formula for calculating interest payments?

Hello

My first post to this news group.

formula I should use to calculate the monthly/fortnightly payments which
would need to be made on an interest only loan.

I have used PMT and IPMT but my results don't quite correspond with other
online calculators. I really would like to be able to develop my own
calculations in Excel and be confident the resultrs are reasonably accurate.

Jack

2. ## Re: Formula for calculating interest payments?

On Mon, 14 Mar 2005 14:17:31 GMT, "Jack Shearer" <aylict@msn.com> wrote:

>Hello
>
>My first post to this news group.
>
>formula I should use to calculate the monthly/fortnightly payments which
>would need to be made on an interest only loan.
>
>I have used PMT and IPMT but my results don't quite correspond with other
>online calculators. I really would like to be able to develop my own
>calculations in Excel and be confident the resultrs are reasonably accurate.
>
>
>Jack
>

if it is an interest-only loan, then the payments would be given by the
formula:

=Interest_rate_per_period * Principal

So if your interest is quoted as yearly but your payments are monthly, you
would divide that number by 12.

--ron

3. ## Re: Formula for calculating interest payments?

Interest only means you are not paying down any principal. You are paying
only the interest charged in a period. Therefore you can't use the financial
functions, because they all assume you will have the loan paid off by the
end of the term.

In your case, to calculate the monthly interest charge, use:

=AnnualRate * Principal / 12

To calculate the fortnightly charge:

=AnnualRate * Principal / 26

--
Regards,
Fred

"Jack Shearer" <aylict@msn.com> wrote in message
news:%1hZd.197651\$K7.130392@news-server.bigpond.net.au...
> Hello
>
> My first post to this news group.
>
> formula I should use to calculate the monthly/fortnightly payments which
> would need to be made on an interest only loan.
>
> I have used PMT and IPMT but my results don't quite correspond with other
> online calculators. I really would like to be able to develop my own
> calculations in Excel and be confident the resultrs are reasonably
> accurate.
>
>
> Jack
>
>

4. ## Re: Formula for calculating interest payments?

Thanks guys.

Of course this is the method. Benn quite a while since I worked with
figures and was looking for a complicated process. Well that's my excuse
and I'm sticking to it.

Jack

"Jack Shearer" <aylict@msn.com> wrote in message
news:%1hZd.197651\$K7.130392@news-server.bigpond.net.au...
> Hello
>
> My first post to this news group.
>
> formula I should use to calculate the monthly/fortnightly payments which
> would need to be made on an interest only loan.
>
> I have used PMT and IPMT but my results don't quite correspond with other
> online calculators. I really would like to be able to develop my own
> calculations in Excel and be confident the resultrs are reasonably

accurate.
>
>
> Jack
>
>

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