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 profit (interest) charges. This is the standard formula used by Emirates Islamic for their credit card personal loans in the UAE.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

• \( P \) — Principal loan amount (AED)
• \( r \) — Monthly profit rate (annual rate ÷ 12)
• \( n \) — Number of monthly payments
• \( PMT \) — Monthly payment amount (AED)

Explanation: The formula accounts for the time value of money, ensuring each payment covers both principal and profit proportionally over the loan term.

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 offers.

4. Using the Calculator

Tips: Enter the loan amount in AED, annual profit rate in percentage, and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is this calculator specific to Emirates Islamic credit cards?
A: Yes, this uses the standard formula for personal loans through Emirates Islamic credit cards in the UAE.

Q2: What is a typical profit rate for these loans?
A: Rates vary but typically range from 3% to 8% annually depending on creditworthiness and current offers.

Q3: Are there any additional fees?
A: There may be processing fees or insurance costs not included in this calculation. Check with the bank for complete details.

Q4: Can I pay off the loan early?
A: Early repayment may be possible but could involve additional fees. Confirm terms with Emirates Islamic.

Q5: How accurate is this calculator?
A: This provides a close estimate, but the bank's actual calculation may differ slightly due to rounding or specific policies.