# Consumer loan help!

Ok I've tried to google this but no luck their. I'm writing a program that calculates someones consumer loan. If we use $1000 as principle, and 15%(.15) as the rate and the duration of the loan is 18 months, you would in the end only get$775 because the the interest is deducted from the principle leaving you with 775$from$1000. The user enters their own principle, rate, and time, and the program is suppose to calculate how much to request by adding an extra to the principle. For example: If I want a $1000 loan(15%int. 18 months duration) and the interest is taken out at the time of the loan I would only get$775. I need to come up with a number for them to request to get the $1000 loan they need. So does anyone know of an equation that I could use to calculate any principle, rate, time to come up with the requested loan amount they need to ask for. Thank You! #### TchrWill ##### Full Member I'm writing a program that calculates someones consumer loan. If we use$1000 as principle, and 15%(.15) as the rate and the duration of the loan is 18 months, you would in the end only get $775 because the the interest is deducted from the principle leaving you with 775$ from $1000. The user enters their own principle, rate, and time, and the program is suppose to calculate how much to request by adding an extra to the principle. For example: If I want a$1000 loan(15%int. 18 months duration) and the interest is taken out at the time of the loan I would only get $775. I need to come up with a number for them to request to get the$1000 loan they need. So does anyone know of an equation that I could use to calculate any principle, rate, time to come up with the requested loan amount they need to ask for.

The formula for calculating a monthly loan payment is R = Pi/[1 - 1/(1+i)^n] where R = the periodic payment, P = the principal, or debt to be paid off, n = the number of payment periods over which the payments will take place, and i = the periodic interest rate in decimal form. The interest rate for a loan is usually quoted as an annual rate such as 8%. In the formula the first thing we do is convert this to i = .08 when considering annual payments.
If payments are to be made monthly, i = .08/12 = .006666 as the monthly interest rate. An example will illustrate the use of the formula.
Lets say you want to borrow $10,000 for a home improvement, to be paid off monthly over a period of 5 years, with an annual interest rate of 8%. So P = 10,000, n = 5 x 12 = 60, i = .08/12 = .006666. Then we have R = 10000(.006666)/[1 - 1/(1+.006666)^60] = 66.66/[1 - 1/(1.489790] = 66.66/.328764 =$202.76 per month. As simple as that. Over the life of the loan you will pay $12,165.49 back to the bank thereby incurring the cost of$2,165.49 for the priviledge of borrowing the money.

#### Denis

##### Senior Member
I'm writing a program that calculates someones consumer loan. If we use $1000 as principle, and 15%(.15) as the rate and the duration of the loan is 18 months, you would in the end only get$775 because the the interest is deducted from the principle leaving you with 775$from$1000.
Are you sure there are such loans? They are evidently "single payment loans".
Seems illegal: you're charged interest on 1000, but get only 775.
I presume 15% is used for calculation purposes, and is not the interest rate
declared on the contract; borrowing 775 and paying back 1000 18 months later
calls for a rate of ~17.11 % cpd. monthly.

Anyway, if you simply need the mechanics:
t = total loan (1000)
c = cash proceeds (775)
r = rate (.15)
n = number of months (18)

Formula: t = 12c / (12 - rn)

If the borrower wishes to obtain $775 (your example): t = 12(775) / (12 - .15(18)) = 1000 = amount of loan to request Another example: you wish to get$1200, rate is 9%, time is 27 months:
t = 12(1200) / (12 - .09(27)) = ~1504.70 = amount to request