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. This calculation is based on the principal amount, interest rate, and loan term.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

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

Explanation: The formula accounts for compound interest over the loan term, calculating a fixed payment that covers both principal and interest each month.

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps with budgeting and comparing loan offers from different banks in the Philippines (e.g., BDO at 6.00%).

4. Using the Calculator

Tips: Enter principal in PHP, annual interest rate as a percentage (e.g., 6.00 for 6%), 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 the Philippines?
A: As of 2024, rates typically range from 6% to 24% annually depending on the bank and borrower's creditworthiness.

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 (1-5% of loan amount), documentary stamps, and late payment fees.

Q4: Can I prepay my loan?
A: Most banks allow prepayment but may charge prepayment penalties, especially in the early months.

Q5: How accurate is this calculator?
A: This provides an estimate. Actual loan terms may vary based on bank policies and your credit profile.