1. What is the Personal Loan Payment Formula?

The personal loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term. This is commonly used by Malaysian banks like CIMB, Maybank, and others for personal loan calculations.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

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

Explanation: The formula accounts for compound interest over the loan term, calculating a fixed payment that covers both principal and interest each month.

3. Importance of Loan Calculation

Details: Accurate loan payment calculation helps borrowers understand their financial commitments, compare loan offers, and budget effectively for repayments.

4. Using the Calculator

Tips: Enter the principal amount in MYR, annual interest rate (e.g., 4.38 for 4.38%), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical interest rate for personal loans in Malaysia?
A: Rates vary by bank and borrower profile, but typically range from 3.5% to 10% p.a. as of 2023.

Q2: How does loan term affect monthly payments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms have higher payments but lower total cost.

Q3: Are there other fees besides interest?
A: Some banks charge processing fees (1-3% of loan amount) or insurance fees. These are not included in this calculation.

Q4: Can I prepay my loan?
A: Most banks allow prepayment but may charge an early settlement fee (typically 1-3% of outstanding balance).

Q5: How accurate is this calculator?
A: This provides a good estimate, but actual payments may vary slightly due to bank rounding methods or additional fees.