1. What is the Personal Loan Payment Formula?

The PMT formula calculates fixed monthly payments for personal loans in UAE, commonly used by banks like Emirates NBD. It accounts for principal amount, interest rate, and loan term to determine the periodic payment amount.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

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

Explanation: The formula calculates the fixed payment required each period to pay off a loan with fixed interest over the specified term.

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps with budgeting and comparing loan offers from different UAE banks. It shows the true cost of borrowing.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What is typical interest rate for UAE personal loans?
A: Rates vary but typically range from 3% to 15% annually depending on bank, loan amount, and customer profile.

Q2: Are there other fees besides interest?
A: UAE banks may charge processing fees (1-3% of loan amount), early settlement fees, or late payment penalties.

Q3: How does loan term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms have higher payments but lower total cost.

Q4: Can I prepay my UAE personal loan?
A: Most UAE banks allow prepayment but may charge 1-3% of outstanding amount as early settlement fee.

Q5: What's the maximum loan amount in UAE?
A: Typically up to 20 times your monthly salary, with maximum amounts varying by bank (often up to AED 2 million).