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, including principal and interest. This is the standard formula used by BankBazaar and most lenders in the Philippines.

2. How Does the Calculator Work?

The calculator uses the personal loan payment formula:

Where:

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

Explanation: The formula accounts for compound interest over the loan term, calculating a fixed payment that pays off both principal and interest over time.

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 principal amount in PHP, annual interest rate as a percentage, and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical interest rate in the Philippines?
A: Personal loan rates typically range from 10% to 24% 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, insurance, or other charges.

Q4: What's the maximum loan term available?
A: Most personal loans in the Philippines offer terms from 12 to 60 months (1-5 years).

Q5: How accurate is this calculator?
A: It provides accurate estimates for fixed-rate loans. Actual offers may vary based on credit assessment.