1. What is the Loan Payment Formula?

The loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term, including interest. It's the standard formula used by banks like Lloyds for personal loans.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

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

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

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 GBP, annual interest rate (e.g., 5.5 for 5.5%), and loan term in months (e.g., 60 for 5 years). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What interest rates does Lloyds Bank offer?
A: Rates vary based on credit score, loan amount, and term. As of 2023, rates typically range from 5.2% to 24.9% APR.

Q2: Are there any fees with Lloyds personal loans?
A: Lloyds typically charges no arrangement fees for personal loans, but early repayment fees may apply.

Q3: What's the maximum loan amount?
A: Lloyds offers personal loans from £1,000 to £50,000, depending on your circumstances.

Q4: How does repayment work?
A: Fixed monthly payments are deducted directly from your Lloyds account on an agreed date.

Q5: Can I pay off my loan early?
A: Yes, but there may be an early repayment charge of 1-2 months' interest.