Sometimes a loan (or lease) can be negotiated in which a specific number of monthly payments are going to be skipped each year. Seasonality is usually the reason for such an agreement. For example, because of heavy rainfall, a bulldozer cannot be operated in Oregon during December, January, and February. Lessees who wish to make payments only when their machinery is being used will make nine payments per year, but the interest will continue to compound during the months in which a payment is not made. The following equation calculates the monthly payment amount necessary to amortize the loan in the specified amount of time. The payment occurs at the end of the month and the term of the loan must be an integral number of years.
note:This equation assumes that the payment will occur at the end of the month, and the term of the loan will be an integral number of years.