The first step to calculating your monthly loan payment is;

1. Identifying Your Loan Type: This will determine your loan payment schedule. You must know if your loan is an interest-only loan or amortized loan. Once you’ve done that it will be easy to figure out the type of loan payment calculation you need.
An interest only loan is when you pay only the interest for the first few years. while an amortized loan includes both the interest and the principal over a set time.

2. Payment Formula for Amortized Loan: This involves math. But not to worry we’ll make it simpler for you, so stay with us.
Let’s say you get a loan of N1,000,000 at 12% annual interest rate for 2 years. To solve this, you will first find the number value.

A = payment amount period
P = initial principal [N1,000,000]
r = interest rate per period [12% /12month = 0.01]
formular; A = P * r

A = 0.01 * N1,000,000

= N10,000

N10,000 is the how much you’ll pay in interest in the fist month. Then, as you continue you more of the payment goes to the principal and less to interest. You can follow the same formula to figure out each month interest payment

3. Payment Formula Interest-only Loan: Let’s say your loan is N1,000,000 with 10% annual interest for 2 years. All you have to do is multiply the money you borrowed by your interest rate. Then divide the answer by 12month.
Here,
N1,000,000 * 0.1 =N100,000 interest each year.

N100,000 * 12 months = N8,333 interest per month.

NB: There’s an easy way to avoid this. Let a loan calculator can do the math for you. Visit: www,offerservice.com