1. What is the Remaining Balance Formula?

The remaining balance formula calculates how much you still owe on a loan after making a series of payments, taking into account the interest rate and payment schedule.

2. How Does the Calculator Work?

The calculator uses the remaining balance formula:

Where:

• \( RB \) — Remaining balance ($)
• \( PMT \) — Monthly payment amount ($)
• \( r \) — Monthly interest rate (decimal)
• \( m \) — Number of remaining payment periods

Explanation: The formula accounts for both principal and interest portions of each payment to determine the outstanding loan balance.

3. Importance of Loan Balance Calculation

Details: Knowing your remaining balance helps with financial planning, refinancing decisions, and understanding how extra payments affect your loan payoff timeline.

4. Using the Calculator

Tips: Enter your regular monthly payment amount, monthly interest rate (annual rate divided by 12), and the number of payments remaining. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert annual rate to monthly rate?
A: Divide your annual percentage rate (APR) by 12. For example, 6% APR becomes 0.06/12 = 0.005 monthly rate.

Q2: Does this account for extra payments?
A: This shows the remaining balance based on regular payments. For extra payments, you would need to recalculate with adjusted parameters.

Q3: Why does my balance decrease slower at first?
A: Early payments are mostly interest. As the balance decreases, more of each payment goes toward principal.

Q4: Can I use this for any type of loan?
A: This works for standard amortizing loans (mortgages, auto loans). It doesn't apply to interest-only or balloon payment loans.

Q5: How accurate is this calculator?
A: It provides a good estimate, but your lender's calculation may differ slightly due to rounding or specific policies.