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 principal and interest. It's used for standard amortizing loans where payments remain constant throughout the loan term.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

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

Explanation: The formula accounts for compound interest over the life of the loan, distributing payments equally across all periods.

3. Importance of Loan Payment Calculation

Details: Calculating accurate loan payments helps borrowers understand their financial commitments, compare loan offers, and budget effectively.

4. Using the Calculator

Tips: Enter the principal amount in AED or USD, annual interest rate (as percentage), loan term in years, and select currency. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between AED and USD calculations?
A: The calculation is identical for both currencies - the currency selection only affects the displayed result format.

Q2: Does this include any fees or insurance?
A: No, this calculates only principal and interest payments. Additional costs may apply to actual loans.

Q3: What if I make extra payments?
A: Extra payments reduce principal faster and can shorten loan term, but this calculator assumes fixed regular payments.

Q4: How accurate is this calculator?
A: It provides mathematically precise results for standard fixed-rate loans, but actual loan terms may vary.

Q5: Can I use this for mortgage calculations?
A: Yes, this formula works for any standard amortizing loan including mortgages, car loans, and personal loans.