1. What is the Loan Payment Formula?

The loan payment formula calculates the fixed monthly payment required to fully repay a loan with interest over a specified term. It accounts for both principal and interest components of the payment.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

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

Explanation: The formula calculates the fixed payment needed to pay off a loan with interest over the specified term, where each payment includes both principal and interest components.

3. Importance of Loan Payment 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 PHP, annual interest rate as a percentage (e.g., 5.5 for 5.5%), 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 the principal and interest portion of the payment. Taxes, insurance, and other fees would be additional.

Q2: How does the payment change with different terms?
A: Longer terms result in lower monthly payments but higher total interest paid over the life of the loan.

Q3: What's the difference between fixed and variable rates?
A: This calculator assumes a fixed interest rate. Variable rates would require recalculating as rates change.

Q4: Can I use this for other currencies?
A: Yes, the formula works for any currency, though the calculator displays results in PHP.

Q5: How accurate is this calculation?
A: It provides the exact mathematical calculation, but actual loan payments may include additional fees or rounding differences.