What is the estimated monthly payment for a $100,000 loan at a 6% interest rate over 30 years?

To determine the estimated monthly payment for a loan, the formula used is based on the amortization of the loan over a specified period, taking into account the interest rate and loan amount. For a fixed-rate mortgage, the formula is:

M = P [r(1 + r)^n] / [(1 + r)^n – 1]

Where:

• M is the total monthly mortgage payment.
• P is the loan amount (principal).
• r is the monthly interest rate (annual rate divided by 12).
• n is the number of payments (loan term in months).

In this case:

• The loan amount (P) is $100,000.
• The annual interest rate is 6%, so the monthly interest rate (r) is 0.06 / 12 = 0.005.
• The loan term is 30 years, which equals 30 x 12 = 360 months (n).

Plugging these values into the formula gives:

M = 100,000 [0.005(1 + 0.005)^360] / [(1 + 0.005)^360 – 1]

Calculating this results in a monthly payment of approximately $599.55.

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