Amortization Calculator With Delayed Payments

Amortization Formula with Delayed Payments:

\[ \text{New PV} = PV \times (1 + r)^d \] \[ PMT = \text{New PV} \times \frac{r}{1 - (1 + r)^{-n}} \]

Initial Principal (PV):

USD

Annual Interest Rate:

Delay Period:

months

Amortization Term:

months

Adjusted Principal (New PV):

Monthly Payment (PMT):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Amortization with Delayed Payments?

This calculator computes loan payments when there's an initial period where payments are delayed but interest continues to accrue. The principal grows during the delay period, and the regular payments are then calculated based on this higher amount.

2. How Does the Calculator Work?

The calculator uses two key formulas:

\[ \text{New PV} = PV \times (1 + r)^d \] \[ PMT = \text{New PV} \times \frac{r}{1 - (1 + r)^{-n}} \]

Where:

\( PV \) — Initial principal (USD)
\( r \) — Monthly interest rate (decimal)
\( d \) — Delay period (months)
\( n \) — Amortization term (months)
\( \text{New PV} \) — Adjusted principal after delay
\( PMT \) — Monthly payment amount

Explanation: The first formula calculates how much the loan grows during the delay period. The second formula calculates the regular payment amount needed to pay off this larger amount over the amortization term.

3. Importance of Accurate Calculation

Details: Proper calculation ensures borrowers understand their true payment obligations after any grace periods or deferred payment arrangements. Lenders use this to structure loans with delayed payment options.

4. Using the Calculator

Tips: Enter the initial loan amount, annual interest rate, number of months payments will be delayed, and the repayment term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What types of loans use delayed payments?
A: Student loans often have deferment periods, mortgages may have delayed first payments, and some personal loans offer grace periods.

Q2: How does interest accrue during the delay?
A: Interest compounds monthly, increasing the principal amount before regular payments begin.

Q3: Is the total cost higher with delayed payments?
A: Yes, because interest accrues during the delay period and you're paying interest on that interest.

Q4: Can I make payments during the delay period?
A: Some loans allow voluntary payments during deferment which would reduce the adjusted principal.

Q5: How accurate is this calculator?
A: It provides precise mathematical results assuming constant interest rate and no additional fees.