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 both principal and interest components. It's commonly used by Malaysian banks like CIMB, Maybank, and Public Bank for personal and home loans.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( P \) — Principal loan amount (MYR)
• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Total number of payments (loan term in months)
• \( PMT \) — Monthly payment amount (MYR)

Explanation: The formula accounts for compound interest over the loan term, calculating a fixed payment that fully amortizes the loan.

3. Importance of Loan Payment Calculation

Details: Understanding your monthly payment helps with budgeting and financial planning. It allows you to compare different loan offers and choose the most suitable option.

4. Using the Calculator

Tips: Enter the principal amount in MYR, annual interest rate (e.g., 4.38 for 4.38% p.a.), and loan term in years. The calculator will show monthly payment, total repayment amount, and total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical interest rate for personal loans in Malaysia?
A: Rates vary by bank and credit profile, but typically range from 3.5% to 9% p.a. for personal loans.

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

Q3: Are there other fees besides interest?
A: Malaysian banks may charge processing fees (typically 1-3% of loan amount) and insurance premiums.

Q4: Can I pay off my loan early?
A: Most banks allow early settlement but may charge a penalty (usually 1-3% of outstanding balance).

Q5: How accurate is this calculator?
A: It provides a close estimate, but actual payments may vary slightly due to bank-specific rounding methods.