Loan Repayment Calculator India

Loan Payment Formula:

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

Monthly Payment (PMT):

Total Payment:

Total Interest:

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1. What is the Loan Repayment Formula?

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

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

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

Where:

\( P \) — Principal loan amount (INR)
\( r \) — Monthly interest rate (annual rate divided by 12)
\( n \) — Number of monthly payments (loan term in years × 12)
\( PMT \) — Monthly payment amount (INR)

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 INR, annual interest rate in percentage, and loan term in years. The calculator will show your monthly payment, total repayment amount, and total interest paid over the loan term.

5. Frequently Asked Questions (FAQ)

Q1: Are there other charges not included in this calculation?
A: This calculator shows only the principal and interest components. Actual loans may include processing fees, insurance, or other charges.

Q2: How does prepayment affect my loan?
A: Prepaying reduces your principal, which can decrease total interest and shorten the loan term. Check your bank's prepayment policies.

Q3: What is the difference between reducing balance and flat rate interest?
A: This calculator uses reducing balance method (standard in India), where interest is calculated on the outstanding principal. Flat rate calculates interest on the original principal throughout.

Q4: How does loan tenure affect my payments?
A: Longer tenures reduce monthly payments but increase total interest paid. Shorter tenures mean higher monthly payments but less total interest.

Q5: Are home loan rates different from personal loan rates?
A: Yes, home loans typically have lower interest rates than personal loans as they are secured against property.