1. What is the FAB Loan Payment Formula?

The FAB (First Abu Dhabi Bank) loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term. This is the standard formula used for amortizing loans in the UAE.

2. How Does the Calculator Work?

The calculator uses the FAB loan payment formula:

Where:

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

Explanation: The formula calculates the fixed payment that covers both principal and interest each month, with more going toward interest early in the loan term.

3. Importance of Loan Calculation

Details: Accurate loan payment calculation helps borrowers understand their financial commitments, compare loan offers, and plan their budgets effectively.

4. Using the Calculator

Tips: Enter the principal amount in AED, 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: What fees are included in this calculation?
A: This calculates the principal and interest payment only. Additional fees like processing fees or insurance may apply to actual FAB loans.

Q2: How does the payment change with different terms?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms have higher payments but lower total interest.

Q3: Is this calculator specific to FAB UAE?
A: While using FAB's standard formula, similar calculations apply to most conventional loans in the UAE.

Q4: What if I want to make extra payments?
A: Extra payments reduce principal faster and can shorten loan term. This calculator shows standard payment amounts only.

Q5: How accurate is this calculator?
A: It provides accurate estimates based on inputs, but actual loan terms may vary based on creditworthiness and bank policies.