Annuity on Loan Calculator
Calculate the equal annuity payment required to pay off a loan over a set number of periods.
Understanding Loan Annuities
A loan annuity is simply a fixed, regular payment made to a lender that covers both the principal and the interest over a specific period of time. This is the exact math used for standard car loans and mortgages.
The Annuity Formula
The formula ensures that at the end of the term, the loan balance is exactly zero. Early payments consist mostly of interest, while later payments consist mostly of principal.
Worked Example
- Loan Principal: $100,000
- Interest Rate: 5% (annual rate, assuming annual payments for simplicity)
- Periods: 10 Years
- Annual Payment = $12,950.46
- Total Paid over 10 Years = $129,504.60.
Frequently Asked Questions
Can I use this for monthly loans?
Yes. If you have a monthly loan, divide your annual interest rate by 12, and multiply your years by 12 to get the total number of periods.
Disclaimer: This calculator is for educational and informational purposes only. It is not a substitute for professional financial advice. Results are estimates based on the information provided and may not reflect actual outcomes. Please consult with a qualified financial advisor, accountant, or tax professional before making any financial decisions. Past performance does not guarantee future results.