# How to Calculate Interest Only Payment - Formula

I am trying to make a calculation for a monthly and biweekly - INTEREST ONLY.

My Values: Loan: 30,000 Annual Rate: 2.99% Term 2 Years, 4 Months

Calculation: 2 Years 4 Months = 2.33 Years Monthly

``````Interest_Per_Year = 30,000 * ((2.99 / 100) * 2.33) / 2.33
Total Interest = Interest_Per_Year * (2 years + ( 4 Months / 12)
Monthly Payments = Total Interest / (2.33 * 12)
``````

Bi Weekly

``````BiWeekly = (Interest Rate / 100) / 26
TotalInterest = BiWeekly * Number Of Months
ByWeeklyPay = totalInterest / Number Of Months

Total Bi Weekly Interest = totalInterest * 2

Monthly: \$74.95
Total: \$2691

BiWeekly: \$34.5
Total: \$2484
``````

Can someone please verify if this is correct.

Assuming 2.99% effective annual rate of interest.

``````s = 30000
i = 2.99/100
``````

Here is the monthly interest calculation.

`r` is the periodic rate calculated from the effective annual rate.

The periodic interest is `s r` so the total interest is `s r n`.

``````n = 28
r = (1 + i)^(1/12) - 1
s r   = 73.7448
s r n = 2064.85
``````

Here is the biweekly interest calculation, assuming 52.1775 weeks per year.

``````b = 52.1775/2
n = 2 b + b/3
r = (1 + i)^(1/b) - 1
s r   = 33.8978
s r n = 2063.48
``````

Your bi-weekly "total interest" calculation is off: the 26 payments isn't relevant since you're not multiplying the interest per year by 4/26 for the final part year (it's still 4/12 of a year, regardless of how many payments you make). It's also missing a closing bracket.

The rest seems fine, but you can simplify:

• Interest per year = loan * annual rate = \$30,000 * 2.99%
• Monthly interest = Interest per year / 12
• Fortnightly interest = Interest per year / 26
• Number of months = 2*12 + 4 = 28
• Total interest = Monthly interest * number of months
• I have updated my question for the bi weekly, please see! Sep 8 '18 at 4:38