Total Cost of a Loan Formulas

Below you will find descriptions and details for the 3 formulas that are used to compute the total cost of a loan.

Loan payment amount:

where PV is the present value of the loan (i.e., the loan amount) and PVIFA is the present value interest factor of an annuity.

Present value interest factor of an annuity:

where R is the periodic interest rate and N is the number of periods.

Total cost of a loan:

where PMT is the loan payment amount and N is the number of payments.

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