To calculate the monthly payment for a loan using an amortization table, you need to know the loan amount, down payment, interest rate, and loan term (in months).
Given:
Loan amount (Principal): $26,000
Down payment: $5,000
Interest rate: 11% per annum
Loan term: 36 months
To calculate the monthly payment, follow these steps:
Step 1: Calculate the Loan Amount
The loan amount is the principal minus the down payment:
Loan Amount = Principal - Down Payment
Loan Amount = $26,000 - $5,000
Loan Amount = $21,000
Step 2: Convert the Annual Interest Rate to Monthly Interest Rate
Divide the annual interest rate by 12 to get the monthly interest rate:
Monthly Interest Rate = Annual Interest Rate / 12
Monthly Interest Rate = 11% / 12
Monthly Interest Rate = 0.11 / 12
Monthly Interest Rate = 0.009167 (rounded)
Step 3: Calculate the Monthly Payment using the Amortization Formula
The formula to calculate the monthly payment for a loan using an amortization table is:
Monthly Payment = (Loan Amount * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate) ^ (-Loan Term))
Plugging in the values we calculated earlier:
Monthly Payment = ($21,000 * 0.009167) / (1 - (1 + 0.009167) ^ (-36))
Now, you can use a calculator or a spreadsheet to perform the calculation:
Monthly Payment = $684.70 (rounded to two decimal places)
Therefore, the monthly payment for this loan, based on the loan amortization table, is approximately $684.70.