1. What is Loan Tenure Calculation?

The loan tenure calculation determines how long it will take to pay off a personal loan based on your monthly payment amount, loan principal, and interest rate. It helps borrowers understand their repayment timeline.

2. How Does the Calculator Work?

The calculator uses the loan tenure formula:

Where:

• \( n \) — Loan tenure in months
• \( PMT \) — Monthly payment amount (USD)
• \( P \) — Principal loan amount (USD)
• \( r \) — Monthly interest rate (decimal)

Explanation: The formula calculates how many monthly payments are needed to pay off the loan completely, accounting for both principal and interest.

3. Importance of Loan Tenure

Details: Knowing your loan tenure helps with financial planning, budgeting, and comparing different loan options. A shorter tenure means less interest paid overall but higher monthly payments.

4. Using the Calculator

Tips: Enter your monthly payment amount, total loan amount, and annual interest rate. The calculator will determine how long it will take to pay off the loan.

5. Frequently Asked Questions (FAQ)

Q1: Why does my payment need to be higher than the interest?
A: Your payment must cover at least the monthly interest plus some principal, otherwise the loan balance would never decrease.

Q2: How does interest rate affect loan tenure?
A: Higher interest rates increase the time needed to pay off a loan for the same payment amount, as more of each payment goes toward interest.

Q3: What if I want to pay off my loan faster?
A: Increasing your monthly payment will reduce the loan tenure. Even small increases can significantly shorten the repayment period.

Q4: Are there limitations to this calculation?
A: This assumes fixed interest rates and equal monthly payments. Variable rates or irregular payments would require different calculations.

Q5: Can I use this for other types of loans?
A: This formula works for any fixed-rate installment loan, including auto loans and mortgages, not just personal loans.