amount financed formula
BREAKING DOWN 'Amount Financed'. The purpose of the Truth In Lending Act, passed in 1968, is to standardize the disclosures made to borrowers concerning the terms of a loan, most notably in the way costs are calculated. Loan Payment. The loan payment formula is used to calculate the payments on a loan. The formula used to calculate loan payments is exactly the same as the formula used to calculate payments on an ordinary annuity. A loan, by definition, is an annuity, in that it consists of a series of future periodic payments. The PV, or present value, portion of the loan payment formula uses the original loan amount. The original loan amount is essentially the present value of the future payments on the loan, much like the present value of an annuity. Where: r = decimal rate / 12. Example: For repaying a loan of $1000 at 5% interest for 12 months, the equation would be: Monthly payment = [ (0.05 / 12) + (0.05 / 12) / ( (1+ (0.05 / 12)) ^ 12 -1) ] x principal loan amount. DEFINITION of 'Amount Financed'. The actual amount of credit made available to a borrower in a loan, as defined by Regulation Z disclosure requirements of the Truth In Lending Act. Specifically, it is the amount of the loan principal, less prepaid finance charges (loan origination fees, so-called points, adjusted interest, etc.) and any required deposit balance. Total Selling Price is $ 15,340. down Payment is $ 1000. Amount Finance is = 15340 minus 1000= 14,340. In excel, the formula =cell 1( selling price)-cell2(downpayment) Most likely, the cells you were using were formatted as %. Try to format the cells as numbers, especially the cell(downpayment) and the cell of answer. What is the formula for the loan payment calculator? The loan calculator uses the following formula to calculate loan figures: Monthly payment = [ r + r / ( (1+r) ^ months -1) ] x principal loan amount. 30 years. To find the monthly payment for this loan, we can use the Loan Calculator Scenario #1 with $205,000 as the total loan amount (you are not borrowing this much but you will owe this amount when the loan is closed), 7.5% as the interest rate, and 360 as the number of payments (1 payment/month for 30 years). The monthly payment is found to be $1,433.39. TIP Introduction. Lenders are required to provide the borrower with the Total Interest Percentage (TIP) on the Loan Estimate and Closing Disclosure. This is the total amount of interest that the borrower will pay over the life of the loan, expressed a percentage of the loan amount (Interest / Loan Amount = TIP). It is assumed that the borrower will make each payment in full and on time and will not make any additional payments. TIP Table. 30 years. To find the monthly payment for this loan, we can use the Loan Calculator Scenario #1 with $205,000 as the total loan amount (you are not borrowing this much but you will owe this amount when the loan is closed), 7.5% as the interest rate, and 360 as the number of payments (1 payment/month for 30 years). The monthly payment is found to be $1,433.39. Notice that the result has a negative value: -1,427.49. The reason it's negative is because it's a cash outflow. If that looks strange, you can fix it either by making the loan amount negative—which might look equally strange—or by editing the formula to put a negative sign before the loan amount in cell B3. To do that, edit the formula to be the following: =pmt(B4/12,B5*12,-B3,B6,1)
=cell 1( selling price)-cell2(downpayment)