What percent of monthly payment is the principal and the interest

Question

How do I calculate the principal and interest to makes up a monthly payment?????

Answer 1

It would be useful to have more detail.  I have my doubts that the question is giving you the principal amount and the interest amount, and then just asking what the total payment is.  It also doesn't make a lot of sense to me that you're asking "what percent" of the payment is principal and interest.

 

I could be wrong, but I think it far more likely that you have been given the monthly payment and need to figure out which portion (dollar amount, not percent) of that is principal and which portion is interest.

 

So let's do an example of that.  Say your loan is 1000 and the rate is 5% and your payment is $100 each month.

 

When the first payment is due, you have borrowed 1000 for one month, so you use your interest equation to solve for interest for one month:

1000 x .05 x 1/12     (PRT)

 

That equals $4.17.  This is your interest.

 

Since the total payment is $100, and you know $4.17 is the interest portion of it, the balance of the payment goes towards principal:

100 - 4.17 = $95.83

 

If you need to repeat it, take the principal off.  That is, you applied 95.83 to a principal of 1000.  So 1000 - 95.83 = $904.17 principal balance.

 

You then simply repeat the process with the new principal amount:

904.17 x .05 x 1/12 = $3.77

Which is the interest for the next payment.  And so forth.

Answer 2

Your monthly payment = (amount paying down the principal amount of loan) + (amount of interest paying to lender)