1. What is the Loan Payment Formula?

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

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 (term in years × 12)
• \( PMT \) — Monthly payment amount (INR)

Explanation: The formula accounts for compound interest over the loan term, calculating a fixed payment that pays off both principal and interest over time.

3. Importance of Loan Payment Calculation

Details: Understanding your monthly payment helps with budgeting and financial planning. It allows you to compare different loan options and choose terms that fit your financial situation.

4. Using the Calculator

Tips: Enter the principal amount in INR, annual interest rate (without % sign), 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: How does prepayment affect my monthly payment?
A: Prepayment reduces your principal, which may lower future payments or shorten your loan term, depending on Axis Bank's policies.

Q3: Are there different calculation methods for different loan types?
A: The basic formula is the same, but Axis Bank may have specific terms for home loans, personal loans, etc.

Q4: Why is my actual payment slightly different?
A: Actual payments may vary due to rounding, specific payment dates, or additional fees not accounted for here.

Q5: How can I reduce my monthly payment?
A: You can reduce payments by choosing a longer term, negotiating a lower interest rate, or borrowing a smaller principal amount.