1. What is the Bankrate Simple Loan Calculator?

The Bankrate Simple Loan Calculator uses the standard loan payment formula to calculate monthly payments for fixed-rate loans. It helps borrowers understand their payment obligations before taking out a loan.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

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

Explanation: The formula accounts for both principal repayment and interest charges over the loan term, calculating a fixed monthly payment.

3. Importance of Loan Payment Calculation

Details: Understanding your monthly payment helps with budgeting and ensures the loan is affordable. It also shows the total cost of borrowing (principal + interest).

4. Using the Calculator

Tips: Enter the loan amount in USD, annual interest rate as a percentage (e.g., 5.25), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include taxes and insurance?
A: No, this calculates principal and interest only. For a complete payment estimate, add property taxes and insurance (for mortgages).

Q2: What's the difference between APR and interest rate?
A: APR includes fees and other loan costs, while interest rate is just the cost of borrowing the principal.

Q3: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest. Longer terms reduce monthly payments but increase total interest.

Q4: Can I use this for credit cards?
A: No, credit cards use different calculations. This is for fixed-rate installment loans.

Q5: Why does my actual payment differ slightly?
A: Lenders may use slightly different rounding methods or payment schedules.