1. What is the Personal Loan Calculator?

The Personal Loan Calculator computes monthly payments for Indian Bank-style personal loans using the standard amortization formula. While not specific to SBI, it provides accurate estimates for similar loan products.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

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

Explanation: The formula accounts for the time value of money, calculating fixed payments that pay off the loan over its term.

3. Importance of Loan Calculation

Details: Accurate loan calculations help borrowers understand repayment obligations, compare loan offers, and plan their finances effectively.

4. Using the Calculator

Tips: Enter principal in INR, annual interest rate in percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is this calculator specific to SBI?
A: While designed for Indian Bank-style loans, it provides general estimates that apply to similar personal loan products.

Q2: Does this include processing fees or other charges?
A: No, this calculates only the principal and interest components. Actual loan costs may include additional fees.

Q3: What's the difference between reducing balance and flat rate?
A: This calculator uses reducing balance method where interest is calculated on outstanding principal, common for Indian banks.

Q4: How does prepayment affect my loan?
A: Prepayments reduce principal faster, potentially saving interest and shortening loan term, but aren't accounted for here.

Q5: Are the results accurate for all loan types?
A: This is designed for fixed-rate personal loans. Other products like credit cards or variable-rate loans use different calculations.