Sunday, January 6, 2013


Some people have become so dependent on calculators and computers they do not know how to calculate various formulas manually. If you want to manually calculate the financial costs, there is a simple way to do it. You need the terms and conditions of your loan, and there are a couple of different options that you can use for this calculation. When you know how to calculate finance charges, you will discover the total amountneeded to repay the loan


Difficulty: Moderately Easy
Discover all the information for the loan, including the terms of the agreements. For example, if you borrow $ 85,000 from a bank at an interest rate of 12% for 10 years with monthly payments of $ 1,219.50, you can calculate finance charges that accrue on a daily basis.
Convert the interest rate to a decimal number. Take 12% and divide by 100. This will result in a percentage format suitable for your calculation and equation. In this example, 12 percent becomes 0.12.
Divide the interest rate by the number of days in a year. For purposes of simplicity, many lenders use 360 ​​days, which means that each month has 30 days (0.12 / 360 = 0.0003333).Multiply the result by the number of days in the billing cycle (30) and then multiply the result by the balance of $ 85,000. Your financial expenses for the first month will be $ 849.91.Subtract the interest payment of $ 1219.50 to see how the balance will be reduced ($ 1,219.50 - $ 849.91 = $ 369.59).
Calculate the total financing costs to be paid on the loan. Take your monthly payment of $ 1219.50 and multiply by the number of payments, which is 120 in our example. Your result will be the total amount of the loan to be repaid ($ 146,340). Subtract your total loan to be reimbursed for the total amount of fees payable ($ 146,340 - 85,000 = $ 61,340). Financing costs to pay the total duration of 10 years is $ 61,340.

Tips & Warnings

You can calculate the amount of financing fees paid each month for the duration of 10 years, but it would be a long process.