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Thinking about an interest only loan? Hi, I'm Carrie Kukuda the some day coach. I'm
going to give you some tips on how to calculate an interest only loan. First you need to gather
your information of your loan amount, the interest rate and the term on the loan. You
need to also consider if it is an interest only loan that come in different years. So
typically you can do it three year, five year, seven year, ten year loan and that's when
you're paying only on the interest of the loan. After you go through that term of three,
five, seven or ten, you're going to be picking up the principle along with your interest
rate. So that's just a little tip on that. But let's just do an example. Let's take a
loan amount of 100,000 and an interest rate of 5 percent. First you want to calculate
your total annual interest. So you're going to take the 100,000 and you're going to times
it by the interest rate, but you're going to put it in decimal form so its 100,000 times
.05. That number is going to be 5,000 and that's your actual annual interest rate. So
that's what you're going to be paying throughout the year. To get it on a monthly basis, you
divide it by 12. That will give you your loan payment for that year and that is 416 dollars
and 67 cents. Its really that simple, so if you want an interest only loan, do those calculations
and good luck. Again, its Carrie, thank you.