Instruction
1
Check out the mathematical formula for calculating the annuity:
AP = IC × (P × (1 + P)n) / ((1 + P)n - 1),
where AP is the annuity payment on the loan,
SK – the amount of the loan
P – rate per cent, expressed as a decimal and calculated on the period (month, quarter, year, day)
n – number of interest periods.
The expression: (P × (1 + P)n) / ((1 + P)n - 1) is a formula annuity factor.
AP = IC × (P × (1 + P)n) / ((1 + P)n - 1),
where AP is the annuity payment on the loan,
SK – the amount of the loan
P – rate per cent, expressed as a decimal and calculated on the period (month, quarter, year, day)
n – number of interest periods.
The expression: (P × (1 + P)n) / ((1 + P)n - 1) is a formula annuity factor.
2
Decide on loan amount, interest rate and amount of accrual period interest rates. If the first variable you can set for yourself, the second and third you need to learn in the Bank in which you want to get a loan. For comparison, choose a few banks to find out whose conditions are better.
3
Substitute these variables on your loan in a formula. For example, you want to Bank 100 000. The Bank can grant you the loan on the condition of the annuity and the following indicators: interest rate – 20% per annum (monthly interest rate will be equal to 1,6667%), the number of crediting periods – 12 months.
Will perform the necessary calculation: AP = 100 000 x(x 0,016667(1+0,016667) 12)/((1+0,016667)12-1) = 100 000 * 0,016667 * 1,219439/(1,219439-1) = 9261,975 R. per month
Thus, at 20% per annum for 12 months will be paid: 9261,975*12 = 111143,70 R. the cost of the loan will be: 111 143,70 -100 000 = 11 143,70 R.
Will perform the necessary calculation: AP = 100 000 x(x 0,016667(1+0,016667) 12)/((1+0,016667)12-1) = 100 000 * 0,016667 * 1,219439/(1,219439-1) = 9261,975 R. per month
Thus, at 20% per annum for 12 months will be paid: 9261,975*12 = 111143,70 R. the cost of the loan will be: 111 143,70 -100 000 = 11 143,70 R.
4
Make sure that the annuity payment is best for you. Calculate how much you will pay if you have a conventional loan scheme, with the direct accrual of interest on the remaining sum at the same time, the loan is repaid throughout the term in equal installments, the payment is: 100 000 / 12 = 8 333,33 p. per month. Then, the table of loan repayment and payment of interest will appear as shown in the figure. Thus, you will receive the sum of: 100 000 +10 833,33 = 110 833,33 R. This amount is less than the amount of the loan payment, calculated at the annuity method of payment.
Useful advice
The final decision on what system to be credited, please note the conditions of the loan agreements. In addition, consider your risks well. Using conventional lending (direct method of calculation of interest on the balance of payment), the amount of payments is gradually reduced and will be easier to pay the loan every month. In annuity method of calculation of payment for the loan, the payment amount remains the same throughout the crediting period. In addition, if you are going to pay forward, paying off credit larger sums than stated in the contract, when annuity repayment is due the last months, i.e., from the end of the crediting period. You'll just be less time to repay the loan - the monthly payment amount while the Bank is not recalculated (so carefully study the contract with the Bank).
