A financial tool designed to compute periodic installments and the final, substantial, lump-sum payment characteristic of a specific type of financing agreement. This instrument allows borrowers to project their financial obligations under such arrangements. For instance, a user might input the principal amount, interest rate, and loan term to ascertain the regular payment amount and the large final payment due at the end of the term.
This type of calculation is crucial for evaluating the feasibility of such financial products. It provides clarity regarding the total cost of borrowing, encompassing both the recurring installments and the concluding large sum. Historically, these financing options have been utilized in situations where borrowers anticipate increased cash flow or the ability to refinance before the end of the initial loan term. Understanding the payment structure aids in responsible financial planning and risk assessment.
