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 the standard formula used by banks including Absa for 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 divided by 12)
• \( n \) — Number of monthly payments
• \( PMT \) — Monthly payment amount (ZAR)

Explanation: The formula accounts for compound interest over the loan term, calculating equal monthly payments that cover both principal and interest.

3. Understanding Loan Repayments

Details: Your monthly payment remains constant, but the proportion going toward principal vs. interest changes over time (more interest early in the loan term).

4. Using the Calculator

Tips: Enter the loan amount in ZAR, annual interest rate (Absa's current rates), and loan term in months (12-72 months typical for personal loans).

5. Frequently Asked Questions (FAQ)

Q1: What interest rates does Absa charge?
A: Rates vary (typically 12-25% p.a.) based on credit profile, amount, and term. Check Absa's website for current rates.

Q2: Are there additional fees?
A: Absa may charge initiation and service fees. These are not included in this calculation.

Q3: Can I pay extra to reduce interest?
A: Yes, additional payments reduce principal faster, saving interest. Check Absa's prepayment policies.

Q4: How does loan term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms have higher payments but lower total cost.

Q5: Is this calculation exact?
A: This provides an estimate. Actual payments may vary slightly due to rounding or specific bank policies.