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Loan Payment Calculator India

Loan Payment Formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

INR
% p.a.
years

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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 India.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Where:

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 Payment Calculation

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

4. Using the Calculator

Tips: Enter principal amount in INR, annual interest rate (e.g., 10.85 for 10.85% p.a.), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical home loan interest rate in India?
A: As of 2023, rates range from 8.5% to 12% p.a. depending on the lender (e.g., SBI, HDFC, ICICI) and borrower's credit profile.

Q2: How does loan tenure affect payments?
A: Longer tenures reduce monthly payments but increase total interest paid. Shorter tenures mean higher payments but less interest overall.

Q3: Are there other charges besides interest?
A: Yes, Indian loans often include processing fees (0.5-2% of loan amount), GST, and possibly prepayment charges.

Q4: What's the difference between flat and reducing balance rates?
A: Most Indian loans now use reducing balance method where interest is calculated on outstanding principal each month.

Q5: Can I prepay my loan?
A: Most Indian lenders allow prepayment, though some charge fees (especially for fixed-rate loans). Prepayment reduces total interest.

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