1. What is the Loan Payment Formula?

The loan payment formula calculates the fixed monthly payment required to fully repay a loan over its term, including interest. This is the standard formula used by banks and financial institutions in Malaysia.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

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

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

4. Using the Calculator

Tips: Enter the principal amount in MYR, annual interest rate in percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is this calculator specific to Malaysia?
A: While the formula is universal, this calculator uses MYR currency and follows common loan calculation practices in Malaysia.

Q2: Does this include other loan fees?
A: No, this calculates only the principal and interest. Actual loans may include processing fees, insurance, or other charges.

Q3: What's a typical loan term in Malaysia?
A: Common terms are 5-35 years for housing loans, 1-7 years for personal loans, and 3-9 years for car loans.

Q4: How accurate is this calculator?
A: It provides accurate estimates for fixed-rate loans. For variable-rate loans, payments may change when interest rates adjust.

Q5: Can I use this for Islamic financing?
A: Islamic financing uses different calculation methods (like profit rate instead of interest), so this formula may not apply.