👉 Financing math involves calculating the total cost of borrowing money, typically through loans or credit, and understanding how interest affects that cost over time. It starts with determining the principal amount (the loan amount), the interest rate (expressed as a decimal), and the loan term (duration in years). Using these inputs, one can calculate monthly payments using formulas like the annuity formula or the loan payment formula. The math also accounts for compound interest if payments are made periodically (monthly, quarterly, etc.), which means interest is calculated on both the principal and accumulated interest from previous periods. This helps borrowers understand their total repayment amount, including interest, and plan accordingly for long-term financial commitments.
