Calculating Payments Easily

Here I am going to show you how to use a financial calculator to do time value of money calculations you would need to calculate payments on a house, car, vacation home, boat or anything else with equal monthly payments. You will have the power to make salesmen and realtors sweat when they see you pull out your HP 12CP calculator! : )

The model we are using here is the HP12C Platinum. This is the silver/black variant not the gold HP12c with RPN. I like this model and it costs around $65 new and $30 used.

Example #1: Carl Car buys a new SUV

  • Honda CRV LX AWD: $26,800 sale price with tax and title
  • Down payment: $5000 from trade in of his old car
  • Interest on loan: 5% over 4 years, so 48 months
  • The amount we are going to finance is $26,800 price minus $5000 down = $21,800

Hit these keys

Step 1: 21,800 = PV

Step 2: FV = 0

Step 3: N= 48

Step 4: 5  then blue key g, then i (this will input the monthly interest rate). You could also take 5 divided by 12 = 0.4166 and push them i key for interest

Step 5: Press PMT key and voila the answer comes out as -502.04

That is Carl’s monthly payment. Easy as pie. Make sure to hit CLX key to clear the memory before you start the calculation.

Example 2: Francesca Frugal buys a house

  • 3 BR 1500 ft2 house in Big City: $380,000
  • Down payment: $80,000 (around 20%)
  • Interest on loan: 4% over 30 years, so 360 months of payments
  • The amount we are going to finance is the $380,000 price minus $80,000 down = $300,000 total to be financed

Hit these keys

Step 1: 300,000 = PV

Step 2: FV = 0

Step 3: N= 360

Step 4: 5  then blue key g, then i (this will input the monthly interest rate). You could also take 4 divided by 12 = 0.33 and push them i key for interest

Step 5: Press PMT key and voila the answer comes out as -1432.25

That is her payment. Payments are noted as negative number as they are outflows.

And that’s it. Use that to figure out how much house you can afford.

BTW there are emulator apps that will emulate the HP-12C calculator series you can download for your phone. I prefer to hold the real thing “candybar” in hand.

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