1. What is the Personal Loan Payment Formula?

The personal loan payment formula calculates the fixed monthly payment (PMT) required to repay a loan over a specified term. It's commonly used by Malaysian banks like CIMB (at 4.38% p.a.) for personal loan calculations.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

• \( P \) — Principal loan amount (MYR)
• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Number of monthly payments (loan term in months)
• \( PMT \) — Fixed monthly payment amount (MYR)

Explanation: The formula accounts for compound interest over the loan term, calculating the fixed payment needed to fully amortize the loan.

3. Importance of Loan Calculation

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

4. Using the Calculator

Tips: Enter the principal amount in MYR, annual interest rate (like CIMB's 4.38%), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical interest rate for personal loans in Malaysia?
A: Rates vary by bank and borrower profile, but common rates range from 3.5% to 9% p.a. (e.g., CIMB offers around 4.38% p.a.).

Q2: How does loan term affect monthly payments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms have higher payments but lower total interest.

Q3: Are there other fees besides interest?
A: Some banks charge processing fees (usually 1-3% of loan amount) or other administrative fees.

Q4: Can I pay off my loan early?
A: Most banks allow early repayment but may charge a prepayment penalty (typically 1-3% of outstanding balance).

Q5: How accurate is this calculator?
A: This provides a good estimate, but actual payments may vary slightly due to rounding or specific bank policies.