Personal Loan Calculator Comparison

Loan Payment Formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Principal Amount (P):

USD

Loan Term:

months

Lender 1 Interest Rate:

Lender 2 Interest Rate:

Lender 3 Interest Rate (optional):

Monthly Payment Comparison

Unit Converter ▲

Unit Converter ▼

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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. It accounts for the principal amount, interest rate, and loan duration to determine the periodic payment amount.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Where:

\( PMT \) — Monthly payment (USD)
\( P \) — Principal loan amount (USD)
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Number of months in loan term

Explanation: The formula calculates the fixed payment that covers both principal and interest each month, ensuring the loan is paid off by the end of the term.

3. Importance of Loan Comparison

Details: Comparing loan offers from multiple lenders helps borrowers find the most cost-effective option. Even small differences in interest rates can result in significant savings over the life of the loan.

4. Using the Calculator

Tips: Enter the loan amount in USD, loan term in months, and interest rates from different lenders. The calculator will show the monthly payment for each offer, allowing for easy comparison.

5. Frequently Asked Questions (FAQ)

Q1: Why compare multiple loan offers?
A: Different lenders offer varying interest rates and terms. Comparing helps you find the best deal and potentially save hundreds or thousands of dollars.

Q2: What's included in the monthly payment?
A: The calculated payment includes both principal and interest. Additional fees (if any) may not be included unless rolled into the loan amount.

Q3: How does loan term affect payments?
A: Longer terms mean lower monthly payments but higher total interest costs. Shorter terms have higher payments but lower total costs.

Q4: Are the results accurate for all loan types?
A: This calculator works best for fixed-rate installment loans. Adjustable-rate or interest-only loans require different calculations.

Q5: Should I choose the lowest payment?
A: Not necessarily. Consider both the monthly payment and total interest paid over the life of the loan.