maksevalem

Maksevalem is a term used in Estonian finance to describe a mathematical expression for calculating regular payments under financial contracts such as loans, leases, or savings annuities. The word combines makse (payment) and valem (formula). It is commonly encountered in banking, accounting, and financial education to determine how much must be paid each period.

The most widely used form is the fixed-rate loan annuity formula. In plain terms, the periodic payment M is calculated from the loan principal P, the periodic interest rate i, and the number of payments n by the equation M = P * i * (1 + i)^n / [(1 + i)^n - 1]. Here i corresponds to the rate for each payment period (for example, a monthly rate if payments are monthly). This formula yields equal payments over the term of the loan, simplifying budgeting and comparison between offers.

Other maksevalem variants apply when different payment structures are used. These include simple interest schedules, balloon payments at term end, or graduated payments that increase over time. In such cases, the underlying formula changes to reflect the specific schedule, fees, or insurance components included in the contract.

Applications and limitations: maksevalem is used in loan calculators, financial planning, and educational materials to compare offers and forecast total cost. It assumes constant interest rates and term lengths; real-world changes require recalculations and adjustments for additional costs.

See also: amortization, annuity, mortgage, loan amortization.