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.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

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

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

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps with budgeting and ensures you can comfortably afford the loan before committing.

4. Using the Calculator

Tips: Enter the loan amount in ZAR, annual interest rate (without % sign), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include loan fees or insurance?
A: No, this calculates only principal and interest payments. Additional costs may apply to your actual loan.

Q2: How does the interest rate affect payments?
A: Higher rates significantly increase monthly payments, especially for longer-term loans.

Q3: What's better - shorter or longer loan term?
A: Shorter terms mean higher payments but less total interest. Longer terms reduce monthly payments but cost more overall.

Q4: Can I calculate partial year terms?
A: This calculator uses whole years. For partial years, you'd need to enter the exact number of months.

Q5: Are Nedbank's actual rates different?
A: Rates vary based on credit profile. This calculator provides estimates using the rate you input.