1. What is the Loan Payment Formula?

The loan payment formula calculates the fixed monthly payment required to fully repay a loan over its term, including both principal and interest. This is the standard formula used by Axis Bank and most financial institutions for amortizing loans.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

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

Explanation: The formula accounts for compound interest over the life of the loan, calculating a fixed payment that covers both principal and interest each month.

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps with budgeting and financial planning. It also allows you to compare different loan options and understand the total cost of borrowing.

4. Using the Calculator

Tips: Enter the principal amount in INR, annual interest rate as a percentage (e.g., 8.5 for 8.5%), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include Axis Bank's processing fees?
A: No, this calculation only includes principal and interest. Processing fees and other charges would be additional.

Q2: What if I make extra payments?
A: Extra payments reduce the principal faster, decreasing total interest paid and potentially shortening the loan term.

Q3: How accurate is this calculator?
A: This provides an estimate based on the standard formula. Actual Axis Bank loan terms may vary slightly.

Q4: What's the difference between reducing balance and flat rate?
A: This calculator uses reducing balance method (interest on remaining principal), which is standard for Axis Bank loans.

Q5: Can I use this for different loan types?
A: This works for most amortizing loans (home, personal, car) but not for credit cards or interest-only loans.