1. What is the Bankrate Simple Loan Calculator?

The Bankrate Simple Loan Calculator uses the standard amortization formula to calculate fixed monthly payments for personal loans. It helps borrowers understand their repayment obligations before taking a loan.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

• \( P \) — Principal loan amount (USD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of monthly payments (term in years × 12)
• \( PMT \) — Fixed monthly payment amount (USD)

Explanation: The formula accounts for both principal repayment and interest charges, calculating equal monthly payments that fully amortize the loan over its term.

3. Importance of Loan Payment Calculation

Details: Understanding your monthly payment helps with budgeting and ensures the loan is affordable. It also reveals the total interest cost over the loan's life.

4. Using the Calculator

Tips: Enter the loan amount in USD, annual interest rate as a percentage (e.g., 5.5 for 5.5%), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include loan fees?
A: No, this calculates principal and interest only. Additional fees would increase your actual payment.

Q2: What's the difference between APR and interest rate?
A: APR includes fees and other loan costs, while interest rate is just the periodic charge for borrowing.

Q3: How can I reduce my monthly payment?
A: You can reduce payments by extending the loan term, reducing the principal, or securing a lower interest rate.

Q4: Why does my payment seem high?
A: Shorter loan terms and higher interest rates increase monthly payments but reduce total interest paid.

Q5: Is this calculator accurate for all loan types?
A: This works best for fixed-rate personal loans. Adjustable-rate, interest-only, or balloon loans require different calculations.