1. What is the Personal Loan Payment Formula?

The Personal Loan Payment Formula (PMT) calculates the fixed monthly payment required to repay a loan over a specified term, including interest. This is the standard formula used by BankBazaar and most financial institutions in Malaysia.

2. How Does the Calculator Work?

The calculator uses the PMT 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)
• \( PMT \) — Monthly payment amount (MYR)

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. It shows the true cost of borrowing when interest is included.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What's a typical interest rate in Malaysia?
A: Personal loan rates in Malaysia typically range from 5% to 18% annually, depending on credit score and lender.

Q2: 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.

Q3: Are there other fees not included here?
A: This calculator shows principal and interest only. Some loans may have processing fees or insurance costs.

Q4: Can I use this for other types of loans?
A: Yes, this formula works for any fixed-rate installment loan (car loans, home loans, etc.).

Q5: How accurate is this calculator?
A: It provides accurate estimates for fixed-rate loans. For variable-rate loans, payments may change over time.