1. What is the Loan Payment Formula?

The PMT formula calculates the fixed monthly payment required to pay off a loan over a specified term at a given interest rate. It's used by One Nevada Credit Union and other financial institutions for home loans, typically offering rates between 6-7% p.a.

2. How Does the Calculator Work?

The calculator uses the PMT formula:

Where:

• \( P \) — Principal loan amount (USD)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Number of monthly payments (unitless)
• \( PMT \) — Monthly payment amount (USD)

Explanation: The formula accounts for both principal repayment and interest charges over the loan term.

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps with budgeting and comparing loan options. It shows the true cost of borrowing by including interest charges.

4. Using the Calculator

Tips: Enter the loan amount in USD, annual interest rate (typically 6-7% for One Nevada), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What are typical One Nevada loan rates?
A: Home loans typically range between 6-7% p.a., but actual rates depend on credit score, loan type, and market conditions.

Q2: Does this include taxes and insurance?
A: No, this calculates principal and interest only. Your actual payment may include escrow for taxes and insurance.

Q3: How does loan term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms have higher payments but lower total cost.

Q4: Can I calculate for different payment frequencies?
A: This calculator assumes monthly payments. For biweekly or weekly payments, adjustments to the formula are needed.

Q5: Are there prepayment penalties?
A: Check with One Nevada Credit Union. Many loans allow extra payments without penalty, which can reduce total interest.