Learn to calculate monthly payment on bank loan

Loan Schedule

Bank Loan

Almost we all must have availed bank loan for short term and long terms periods to meet our financial needs but few borrowers bothered to understand financial concepts for calculating bank loan. Keeping in view of this observation, I decided to enlighten on this.

Let's assume that you walked in one of bank branch to borrow bank loan. There you were greeted by personal banker. Upon enquiring, you told your intention for borrowing bank loan of 500,000 for period of two years. Hearing that, personal banker gave you the print out of loan schedule. The calculation in Microsoft excel that was been carried out, 24 number of periods, annual interest rate at 4%, monthly interest rate at 0.33%. Borrower would be required to pay lender monthly payment of 21,712.5 against total loan amount of 500,000 for two years.

But calculation was not complete, you noticed in loan calculation, there was no break up, how much interest, principal amount and residual debt to be paid on every month so after your insistence, received the details. When you failed to grasp the logic behind that loan calculation schedule but satisfied soon after getting the clarity from personal banker and decided to apply for bank loan.

Readers must had noticed albeit there are financial calculators available in many websites and mobile apps in smartphones but those not deliver results in detail. So watching video on YouTube would be more meaningful if you decide to watch.