Percent Step loan type is used when geometric repayment series are required.

The resulting payment schedules will have payment series that are stepped by a

certain percentage amount.

Consider a 12 payment loan with initial payments of $100. If this loan is to be

stepped by 10% every 2 payments, the repayment schedule will be as follows:

Here, the Number of Steps is 5 and the Payments per Step is 2.


100 100       110 110       121 121        133.10 133.10       146.41 146.41       161.05 161.05

Initial           First 10%      Second 10%         Third 10%               Fourth 10%               Fifth 10%

payments         step                 step                     step                         step                         step


The following example illustrates the percent step series.


Percent Step - EXAMPLE

Betty Brownie’s Bake Shop needs to purchase a second $19,500.00 oven because her business is doing better than anticipated. Since she expects her income to increase for at least 2 years, she wants to finance the purchase with a 2 year loan that keeps pace with her growing business. A local bank provides her with a 5.5% per month, stepped payment loan, at an interest rate of 14.75% per annum compounded monthly. She takes out the loan on November 16, 2011 and her first payment is due on December 1, 2011.


SolveSolve The monthly payment amount.


NOTE: Before you enter the data, you will need to set the Loan Type to Percent Step.


Your filled out form should look like this:


Percent Step Example

Note: The Number of Steps is set to 23. This is because there are 24 months in 2 years. The payments are going to be stepped every month as indicated by

the Every field of 1. But the first month will not be stepped. This leaves only the next 23 months to be stepped.

If the whole schedule is to be stepped, as in this case, you can set the Make field to any value greater than or equal to the last step (23 or greater for this



ico_smile The Payment for the first month will be $488.02. After with each monthly payment increases by 5.5%.


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