Lump Sum Personal Loan Calculator

Loan Payment Formula:

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

Principal Amount (P):

USD

Annual Interest Rate:

Loan Term:

months

Lump Sum Payment:

USD

Monthly Payment (PMT):

Adjusted Principal:

Total Interest:

Total Payments:

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1. What is the Lump Sum Personal Loan Calculator?

This calculator determines monthly loan payments using the standard loan payment formula, with the added feature of accounting for a lump sum payment that reduces the principal balance.

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 (USD)
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Number of monthly payments
\( PMT \) — Monthly payment amount

Explanation: The formula accounts for compound interest over the loan term, with the lump sum payment reducing the principal amount before calculation.

3. Importance of Loan Payment Calculation

Details: Accurate loan payment calculation helps borrowers understand their financial commitments, plan budgets, and evaluate the impact of extra payments on loan terms.

4. Using the Calculator

Tips: Enter the original loan amount, annual interest rate, loan term in months, and optional lump sum payment. All values must be valid (principal > 0, rate between 0-100%, term ≥1 month).

5. Frequently Asked Questions (FAQ)

Q1: How does a lump sum payment affect my loan?
A: A lump sum payment reduces your principal balance, which decreases both your monthly payment (if recalculated) and the total interest paid over the loan term.

Q2: Should I make a lump sum payment or extra monthly payments?
A: A lump sum payment immediately reduces principal, while extra monthly payments compound over time. The better option depends on your financial situation and goals.

Q3: Does this calculator account for loan fees?
A: No, this calculates basic loan payments. For complete accuracy, include any origination fees in the principal amount.

Q4: What's the difference between interest rate and APR?
A: APR includes fees and other loan costs, while the interest rate is just the cost of borrowing the principal. This calculator uses simple interest rate.

Q5: Can I use this for mortgage calculations?
A: While the formula is similar, mortgages often have additional factors (PMI, escrow, etc.). For mortgages, use a specialized mortgage calculator.