Monthly loan payment on a $25,000 loan for 6 years with a 5.5% interest rate

Given:
Loan Amount: $25,000
Loan Terms: 6 years = 72 months = n  (convert years to months)
Interest Rate: 5.5% =
5.5/100
= 0.055 = r  (convert percent to a decimal)
Monthly Loan Payment Formula:
Monthly Loan Payment =  
Loan Amount  * 
r / 12
/ 1 – ( 1+
r/12
 ) -n

Substitute given values into Monthly Payment Formula:
Monthly Loan Payment =  
25,000  * 
0.055 / 12
/ 1 – ( 1+
0.055/12
 ) -72

Monthly Loan Payment =  $408.45  ( rounded to two decimal places)
Notes:
Total Cost =  Monthly Loan Payment * Number of Payments
Total Cost =  $408.45 * 72 =  $29,408.40
Interest Cost =  Total Cost – Loan Amount
Interest Cost =  $29,408.40 – $25,000 =  $4,408.40

The solution above and other related solutions were provided by the Monthly Loan Payment Application. 

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