1. What is the Loan Payment Formula?

The loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term, including interest. It's based on the principal amount, interest rate, and loan duration.

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)
• \( n \) — Number of monthly payments (term in years × 12)
• \( PMT \) — Monthly payment amount (PHP)

Explanation: The formula accounts for compound interest over the life of the loan, ensuring each payment covers both principal and interest.

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps with budgeting and comparing different loan options. It shows the true cost of borrowing when interest is included.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Why does the calculator show a higher total payment than the principal?
A: The difference is the interest cost over the life of the loan. Longer terms and higher rates increase total interest paid.

Q2: How can I reduce my total interest paid?
A: Choose a shorter loan term or make additional principal payments when possible.

Q3: Does this calculator account for variable interest rates?
A: No, this calculates fixed-rate loans only. Variable-rate loans would require different calculations.

Q4: Are there other costs not included in this calculation?
A: Yes, this doesn't include fees, insurance, or other loan-related costs that may affect your actual payment.

Q5: How accurate is this calculator?
A: It provides accurate estimates for standard fixed-rate loans, but actual lender calculations may vary slightly.