In this tough economic era, managing transportation needs has become imperative to reduce the monthly expenses. Poor including middle class people are now finding it hard to manage vehicle transportation expenses because of rising transportation charges. With rising fuel prices, the transporters seem to increase these charges in future as well. This is why people now consider buying their own vehicles at any cost. For that, a number of people who have insufficient resources now prefer taking loans from money lending companies.
These companies provide cash amounts to people for purchasing a desired vehicle at some interest rate. Mostly repaying the borrowed amount is easy. However, it needs people to check and evaluate their financial capabilities to payback the borrowed amount. A number of ways can be helpful to determine financial capabilities. Nevertheless, knowing how much would need to pay per month out of the total income is perhaps the best way.
In order to calculate the month installment on a particular amount of loan, the borrower should know the following terms:
- The actual price (P) of the vehicle that needs to be purchased
- Interest rate (R) on loans of the particular money lending company
- Accurate number of months (M) allowed to payback the whole amount with interest rate.
Upon using the following mathematical formula for particular amount of vehicle, interest rate, and number of months, one can easily determine how much he/she will need to payback each month on the borrowed amount:
Monthly Installment= [P * (R/12)] / [1 – (1+ R/12)-m]
By entering values and performing fractional methods, the desired results can be obtained.
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