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The monthly payment on a $250,000 loan with a 7% fixed rate for 25 years would be $1,753.04.
What is loan?
A loan is a type of financial agreement in which one party (the lender) provides money or assets to another party (the borrower) with the expectation that the borrower will repay the loan at a later date, usually with interest. Loans are typically used to purchase large items such as a home, car, or college education. Loans can also be used to help pay for smaller expenses such as medical bills, emergency repairs, and more. The terms of the loan, including the interest rate and repayment terms, are typically agreed upon by both parties prior to the loan being dispersed.
This calculation is determined using the following formula:
Monthly payment = (Loan amount * Interest rate) / (1 - (1 + Interest rate)^(-Number of payments))
In this example, the loan amount is $250,000, the interest rate is 7%, and the number of payments is 300 (25 years x 12 months = 300 payments).
Using the formula above, the calculation would be:
Monthly payment = ($250,000 * 0.07) / (1 - (1 + 0.07)^(-300))
= $1,753.04
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