Loan Payment Formula:
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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.
The calculator uses the standard loan payment formula:
Where:
Explanation: The formula accounts for compound interest over the loan term, calculating a fixed payment that covers both principal and interest each month.
Details: Accurate payment calculation helps borrowers understand their financial commitments, compare loan offers, and plan their budgets effectively.
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.
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.