1. What is the Personal Loan Payment Formula?

The personal loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term. It's the standard formula used by Canadian lenders in 2021 for personal loan calculations.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

• \( P \) — Principal loan amount (CAD)
• \( r \) — Monthly interest rate (annual rate ÷ 12 ÷ 100)
• \( n \) — Number of monthly payments
• \( PMT \) — Monthly payment amount (CAD)

Explanation: The formula accounts for both principal and interest payments over the loan term, with payments being equal each month.

3. Importance of Loan Payment Calculation

Details: Accurate payment calculation helps borrowers understand their financial commitments, compare loan offers, and budget effectively.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Are Canadian personal loan rates different in 2021?
A: Yes, 2021 rates were generally lower due to economic conditions, but varied by lender, credit score, and loan terms.

Q2: What's a typical personal loan term in Canada?
A: Most personal loans range from 1-7 years (12-84 months), with shorter terms having higher payments but lower total interest.

Q3: Does this include loan fees?
A: No, this calculates principal and interest only. Some loans may have origination fees or other charges.

Q4: How does credit score affect payments?
A: Higher credit scores typically qualify for lower interest rates, resulting in lower monthly payments.

Q5: Can I pay off my loan early?
A: Most Canadian lenders allow early repayment, but some may charge prepayment penalties - check your loan agreement.