This is a free loan calculator that allows one to calculate and break down monthly repayment figures for a secured or unsecured loan. We start by choosing the loan amount, the annual interest rate (percentage), the number of years and any initial deposits or end-of-term balloon payments. (A balloon payment is a large, lump-sum payment made at the end of a long-term loan. It is commonly used in **car loans** as a way of reducing monthly repayment figures.)

### How does a loan get calculated?

In general, a monthly loan payment is calculated by dividing the interest rate by 12 and then multiplying that number by the principal.

The equation is **M = (I/12) * P**, using the following definitions:

M = monthly payment

I = interest rate

P = principal

For example, if Ks 100,000 is borrowed for 30 years at a 5 percent fixed interest rate, the equation would look like this:

M = (.05/12) * 100,000, so the monthly payment on principal and interest would be Ks 416.67 per month.

Other fees, as mentioned above (insurance and taxes), may be added to this number to come up with the final monthly payment. Note that in the above equation, interest on the loan does not compound.

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