loan calculation???

workingboy

I want to give a family member a loan.

So how do I calculate the interest of a certain amount over say 10 or 20 years. I've done it in many ways, but so varying amounts of interest.

So what is the correct calculation, please.

thanks

TMF

The way the finance company do it is very complicated, if i recall they use a method called 'rule of 78' (not sure if that number is right).

The easiest way would be to just do it like this... £10,000 x 5% = £500 so total repayable would be £10,500

workingboy

Thanks TMF,

Buts thats ok for one year, where I want to know how much 'say' £10,000 would be with interest over 'say' 10 years be worth in total.

One way I did it was..... ((£10,000 x 0.05) x 10 years) + £10,000 = £15,000

I don't know if this is the nearest or best way of doing it.

thanks

CLAPTON

how much do you want to lend them
at what interest rate
and for how long


its a complicated calculation to do it the way mortgage companies do it but if you have EXCEL then there is a built in function called PMT that you can use.