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loan calculation???

workingboy
workingboy Posts: 320 Forumite
Part of the Furniture 100 Posts Name Dropper Combo Breaker
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

Comments

  • TMF
    TMF Posts: 21 Forumite
    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
    workingboy Posts: 320 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    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
    CLAPTON Posts: 41,865 Forumite
    10,000 Posts Combo Breaker
    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.
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