1. What is the PMT Formula?

The PMT (Payment) formula calculates the fixed monthly payment required to repay a loan over a specified term at a constant interest rate. It's the standard formula used by Absa Bank and other financial institutions for personal loan calculations.

2. How Does the Calculator Work?

The calculator uses the PMT formula:

Where:

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

Explanation: The formula accounts for compound interest over the loan term, ensuring each payment covers both principal and interest.

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps with budgeting and ensures the loan is affordable. It also helps compare different loan options.

4. Using the Calculator

Tips: Enter the loan amount in ZAR, annual interest rate (Absa's current rates), and loan term in months (12-84 months typical for personal loans).

5. Frequently Asked Questions (FAQ)

Q1: What are Absa's current personal loan rates?
A: Rates vary (typically 12-24% p.a.) based on credit profile, amount, and term. Check Absa's website for current rates.

Q2: Are there other fees besides interest?
A: Absa may charge initiation and service fees. These are typically included in the APR calculation.

Q3: Can I pay off my loan early?
A: Yes, but early settlement fees may apply. Check Absa's terms for details.

Q4: How does loan term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid.

Q5: Is this calculator accurate for all Absa loans?
A: It provides estimates for standard personal loans. Special loan products may have different terms.