1. What is Loan Payment Calculation?

The loan payment calculation determines the fixed monthly payment required to repay a loan over a specified term, including both principal and interest. This is particularly important for government-backed loans in Nepal where interest rates may vary.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( P \) — Principal loan amount (NPR)
• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Total number of payments (loan term in months)
• \( PMT \) — Fixed monthly payment (NPR)

Explanation: The formula accounts for compound interest over the life of the loan, calculating a payment that will completely pay off the loan by the end of the term.

3. Importance of Loan Calculation

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

4. Using the Calculator

Tips: Enter the principal amount in NPR, annual interest rate in percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What are typical interest rates for Nepal government loans?
A: Rates vary by program but typically range from 5% to 12% annually for government-backed loans.

Q2: Does this calculator account for changing interest rates?
A: No, this calculates fixed-rate loans only. For variable-rate loans, payments would change when rates adjust.

Q3: Are there any fees included in this calculation?
A: No, this calculates principal and interest only. Actual loans may have additional fees.

Q4: How accurate is this calculator for long-term loans?
A: The formula is mathematically precise for fixed-rate loans, assuming payments are made exactly as scheduled.

Q5: Can I use this for other types of loans?
A: Yes, the formula works for any fixed-rate amortizing loan, though rates and terms may differ.