When you're thinking about a home, education, or car loan.
History's lessons for today's decisions ／ Calculate with Your Own Numbers
Calculating the monthly repayment amount
How much to repay each month based on the amount borrowed, annual interest rate, and number of years.
Your Monthly Repayment Amount in 3 Minutes
1See it
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With level payments, your monthly repayment amount stays the same.
At the beginning, a large part of your payment goes toward interest.
Later on, more of it goes toward the principal.
The monthly interest rate is the annual rate divided by 12.
The first numbers in the calculation field are for a 10,000,000 yen loan at 2% for 20 years.
You can replace these with your own numbers.
The price of time is the total amount you repay minus the amount you borrowed.
2In numbers
10,000,000yen
The starting loan amount in the calculator. It shows the monthly and total amounts for a 20-year loan at 2%.
12divide by
To convert the annual interest rate to a monthly rate.
3What would you do?
A family member says, 'I want to talk about our loan repayments.' What number do you look at first?
Pick one
The monthly repayment amount
The monthly amount is fixed, so this is what you usually notice. However, the total amount shows you the price of time. The price of time is the total amount you repay minus the amount you borrowed.
The total repayment amount and the amount borrowed
Subtracting the amount you borrowed from the total repayment amount gives you the price of time. When you enter the loan amount, annual rate, and number of years in the calculator, you'll see three numbers.
4Read more
When to use When considering a mortgage, education, or car loan. When consulted about a family member's debt.
With level payment mortgages, the monthly repayment amount is constant. Initially, the interest portion is large, and later, the principal portion increases. The formula is as shown in the text; the monthly interest rate is the annual rate divided by 12. The difference between the total repayment amount and the amount borrowed is the price of time.
Try with your own numbers
If you change the numbers, it recalculates on the spot. The formula is written below.
Input value
Output value
Monthly repayment amount（10,000 yen）—
Total repayment amount（10,000 yen）—
Total interest (the price of time)（10,000 yen）—
Formula Monthly Repayment = Amount Borrowed × Monthly Rate ÷ (1 − (1 + Monthly Rate)^(-Number of Months)). Monthly Rate = Annual Rate ÷ 12
Related Lectures and Notes
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