How to Work Out a Fixed-Percentage Loan
A fixed percentage loan maintains the same interest rate over the term of the loan. Fixed percentage mortgages offer the advantage of keeping the same payment over the term of the loan, so it is easier for businesses to budget for their loan payments. To work out the monthly payment on a fixed percentage loan, you need to know the amount borrowed, the interest rate, the frequency of payments and the loan term.
Divide the annual interest rate by the number of payments per year to find the interest rate per payment period. For example, if you have an annual interest rate of 7.08 percent, divide 0.0708 by 12 to get 0.0059.
Multiply the interest rate per period by the amount borrowed. For this example, if your fixed-rate loan was for $19,000, multiply $19,000 by 0.0059 to get $112.1.
Add 1 to the interest rate per period. In this example, add 1 to 0.0059 to get 1.0059.
Multiply the number of years in the term of the fixed-percentage loan by the number of payments per year to find the total number of payments made. In this example, if you make monthly payments for six years, multiply 6 by 12 to find you would make 72 payments.
Raise the Step 3 result to the negative power of the total monthly payments. In this example, raise 1.0059 to the negative 72 power to get 0.654717295.
Subtract the Step 5 result from 1. In this example, take away 0.654717295 from 1 to get 0.345282705.
Divide the Step 2 result by the Step 6 result to work out the payment on the fixed-percentage loan. Completing the example, divide 112.1 by 0.345282705 to get $324.66 as the monthly payment.