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 commonly used for home loans, car loans, and personal loans in India.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

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

Explanation: The formula accounts for compound interest over the loan term, spreading payments equally over each month.

3. Importance of Loan Payment Calculation

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

4. Using the Calculator

Tips: Enter principal amount in INR, annual interest rate (e.g., 6.70 for ICICI home loans), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What are typical interest rates in India?
A: As of 2023, home loans range 6.70-8.50% p.a., personal loans 10-18% p.a., and car loans 7-12% p.a. Rates vary by lender and borrower profile.

Q2: How does EMI differ from this calculation?
A: EMI (Equated Monthly Installment) uses this same formula - they are identical concepts.

Q3: Why does the calculator show higher total payment than principal?
A: The difference represents the interest cost over the loan term, which depends on rate and duration.

Q4: Are there other loan types with different calculations?
A: Yes, some loans may have variable rates, balloon payments, or interest-only periods which require different calculations.

Q5: How accurate is this calculator?
A: It provides standard EMI calculation. Actual loan terms may include processing fees, insurance, or other charges not reflected here.