## Loan

**Loans **are one of the most important sources of financial gain for commercial banking, and it is one of the most important services provided to bank customers, as this is done by providing money to individuals and businesses to cover the services they need. and in return the client provides many guarantees and promises to repay these loans. Which he borrowed from the bank with a sum of money called interest owed, and the payment is in several installments, or in a single payment. The bank provides loans, types of loans, and how to calculate loans.

## How do I calculate the interest on the loan?

**Manual Calculation**

The amount of cash that we will obtain is multiplied by the bank's ratio and then the result is divided by one hundred. Thus, the interest value is obtained each year. It is possible to calculate the total amount of interest by multiplying the interest value of each year by the number of years, and to calculate the total amount, the cash amount must be combined with the interest amount, while, according to the monthly payment, the total amount is divided by the number of months of the loan.

Question Example:

If you want to get an amount of 150,000 dinars.

The bank rate is 5% for a period of 5 years, that is, 60 months.

150,000 x 5% = 750,000.

Interest every year: 750,000/100 = 750 dinars.

The total amount of interest is 750 x 5 = 3750 dinars.

To calculate the total amount: 150,000 + 3750 = 18,750 dinars

To calculate the monthly payment: 18750/60 months = 312.5

**Calculate loan interest with Excel**

- By writing the principal and the agreed interest value in the first column, then the funds are filled with the value of the loans, the value of the interest and their duration until the Excel program calculates the monthly payment of interest, for example: 50,000 dinars home, and the borrower must repay it within 20 years at an interest rate of up to 2%.
- Register the value of the debt in negative value with the need to inform Excel that you are obliged to pay it, taking care not to write the currency symbol. Example: 50.00 = the principal of the debt.
- Determine the number of payments to be paid, with the possibility of leaving the payments registered in the unit of the year, but the output will express annual payments, not monthly, the number of years will be multiplied by 12 to calculate the total. example of payments 50.00 = principal, 360 = number of payments.
- The interest rate is converted to match the number of payments. Example: 2./12% = 0.00166%
- The = PMT function is used to determine interest payments, when defining the Excel program to make the mathematical counter of monthly payments, including interest, all that is needed is to provide the necessary information to perform the calculations, then click in an empty box, then select the function bar, and there is this The bar is at the top of the worksheet, marked with fx, then written = PMT. If the borrower knows how to use Excel, he can configure the program to accept payments.
- Entries are written in the correct order, in parentheses, separated by commas Example: (= 50000.0-.360.0.00166 PMT).
- Enter button is pressed to calculate monthly payments. If the data is entered in the correct order, the monthly payments will appear in the PMT = function field on the spreadsheet, but the word #NUM! ”, This indicates that an incorrect value has been entered.
- Total payments are calculated by multiplying the result by the number of payments, in order to find out the total amount that the borrower must pay.
- Calculate the total interest due by subtracting the principal from the total amount owed.

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