This remaining loan balance calculator can be used to calculate what the outstanding balance will be on your loan after a specified time period (time=n) at a future date or at the present. The remaining balance on a loan formula implemented on this calculator is ONLY used for a loan that is amortized. Amortized loans are those in which the payment is applied to both interest and principal and the amount is predetermined.
On This Page
- Remaining Balance On Loan Formula
- Use of Remaining Loan Balance Formula
Remaining Balance On Loan Formula
The Formula to derive the remaining balance on an amortized loan is as follows:
Fv = Pv (1 + r)n – P[ ((1+r)n – 1) / r]
Fv = The future value of the loan (aka the Remaining Loan Balance)
Pv = The present value of the loan (aka the original balance)
P = Payment
r = rate per payment
n = number of payments
It is important to note that when using this formula your ensure your payment rate and the rate per payment relate to one another. This means if you make a $1000 monthly payment, and have a 3.3% annual interest rate, you will need to calculate your monthly interest rate and use that in the formula or the results will be wild.
Use of The Remaining Loan Balance Formula
The remaining loan balance formula for amortized loans is typically used with the following types of bank loans:
- consumer loans
- commercial loans
It is important to note that where the money is spent has no bearing on the remaining balance on loan formula or values.