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 commonly used for home loans, car loans, and personal loans in the Philippines.

2. How Does the Calculator Work?

The calculator uses the 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 loan term, calculating a fixed payment that covers both principal and interest each month.

3. Importance of Loan Calculation

Details: Accurate loan calculations help borrowers understand their repayment obligations, compare loan offers, and plan their finances effectively.

4. Using the Calculator

Tips: Enter the principal amount in PHP, annual interest rate (e.g., 6.00 for 6%), and loan term in years. The calculator will show monthly payment, total repayment, and total interest.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical home loan rate in the Philippines?
A: As of 2023, rates range from 6.00% to 9.00% p.a. for major banks like BDO, BPI, and Metrobank.

Q2: How does loan term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms have higher monthly payments but lower total cost.

Q3: Are there other fees not included?
A: Yes, this calculator doesn't include processing fees, insurance, or other bank charges which may apply.

Q4: What if I make extra payments?
A: Extra payments reduce principal faster, shortening loan term and reducing total interest. This calculator assumes fixed payments.

Q5: How accurate is this for adjustable-rate loans?
A: This is for fixed-rate loans only. Adjustable-rate loans would require more complex calculations.