loan constant

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Loan Constant

The cash flow required to pay the principal and interest on a loan as a percentage of the original principal. This is expressed by dividing the monthly loan payment by the amount of original principal. While less useful now, before financial calculators came to prominence loan constant tables were developed in real estate finance to amortize home loans more easily. Multiplying by a percentage (set in the table) was seen as an easier way to determine a monthly payment.

loan constant

See constant.

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