Calculate My Loan Repayment

Loan Payment Formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Monthly Payment (PMT):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is the Loan Payment Formula?

The loan payment formula calculates the fixed monthly payment required to pay off a loan over a specified term. It accounts for the principal amount, interest rate, and loan duration to determine regular payments.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Where:

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

Explanation: The formula accounts for both principal repayment and interest charges, with more of each payment going toward interest early in the loan term.

3. Importance of Loan Payment Calculation

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

4. Using the Calculator

Tips: Enter the principal 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 only principal and interest. For a complete mortgage payment, you would need to add property taxes, insurance, and possibly PMI.

Q2: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest paid. Longer terms reduce monthly payments but increase total interest costs.

Q3: What's the difference between APR and interest rate?
A: The interest rate is the cost of borrowing the principal, while APR includes fees and other loan costs, giving a more complete picture of borrowing costs.

Q4: Can I use this for any type of loan?
A: Yes, this works for mortgages, auto loans, personal loans, and other fixed-rate installment loans. It doesn't work for credit cards or variable-rate loans.

Q5: How can I pay less interest overall?
A: Make additional principal payments when possible, choose a shorter loan term, or negotiate a lower interest rate.