Formula and example
How it is calculated
Payment = P × i / (1 − (1+i)⁻ⁿ), where monthly rate i = annual percentage rate / 1,200
Worked example
€20,000 over 60 months at zero interest gives a monthly payment of €333.33; rounding may change the final actual payment. At a 5% nominal annual rate, the monthly payment is about €377.42. Total repayment is about €22,645.48, including €2,645.48 in interest.
Things to check
- The model assumes a fixed interest rate and monthly payments. Fees, insurance, credit assessments and legal lending limits are excluded. Totals use the unrounded payment. At zero interest, payment is principal divided by the number of months.
- Use one currency consistently. Examples use euros; the calculation works with any currency.