1. What is the PMT Formula?

The PMT (Payment) formula calculates the fixed monthly payment required to repay a loan over a specified term at a constant interest rate. It's used by Absa and other banks to determine personal loan repayments.

2. How Does the Calculator Work?

The calculator uses the PMT formula:

Where:

• \( P \) — Principal loan amount (ZAR)
• \( r \) — Monthly interest rate (annual rate ÷ 12 ÷ 100)
• \( n \) — Total number of payments (term in years × 12)
• \( PMT \) — Monthly payment amount (ZAR)

Explanation: The formula accounts for compound interest over the loan term, spreading repayments equally across all months.

3. Importance of Loan Calculation

Details: Calculating monthly payments helps borrowers understand affordability, compare loan offers, and plan their budgets before committing to a loan.

4. Using the Calculator

Tips: Enter the loan amount in ZAR, annual interest rate (without % sign), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What interest rates does Absa offer?
A: Absa's personal loan rates vary (typically 12-25% p.a.) based on credit profile, amount, and term. This calculator uses your input rate.

Q2: Are there additional fees?
A: Absa may charge initiation and service fees. These aren't included in this calculation which only considers principal and interest.

Q3: How accurate is this calculator?
A: It provides accurate estimates for fixed-rate loans. Actual offers may vary slightly based on specific terms and rounding.

Q4: Can I change payment frequency?
A: This calculator assumes monthly payments. For weekly or fortnightly payments, the formula would need adjustment.

Q5: How does early repayment affect calculations?
A: Early repayment reduces total interest. This calculator assumes no early repayments or payment changes.