I am trying to calculate the monthly interest on a finance agreement for a car using an excel spreadsheet. The only information I have available is the amount of credit, number of payments, repayment amount and cost of credit. It is slightly different to normal as there is a balloon payment at the end of the duration of finance. How do I calculate the interest on a monthly basis?
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Excel
There are different methods. I would now use Excel
http://www.wikihow.com/Calculate-an-Interest-Payment-Using-Microsoft-Excel
I used to use the rule of 78
http://www.tiac.net/~mabaker/rule_of_78.html
Or use the old fashioned (pre Spreadsheet) method of allocating a fixed sum each month.
Do you mean you know the total amount of interest that will be paid over the life of the agreement but you want to allocate a portion of it to each month on a systematic basis?
The rule of 78 certainly one way, albeit perhaps a little rough and ready, and if you are happy with that further comment is superfluous.