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 interest. It's used by Security Bank Philippines and other financial institutions to determine loan amortization.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

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

Explanation: The formula accounts for both principal repayment and interest charges, spreading payments evenly over the loan term.

3. Importance of Loan Calculation

Details: Accurate loan payment calculation helps borrowers understand their financial commitments, compare loan offers, and plan their budgets effectively.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What's included in the monthly payment?
A: The payment includes both principal and interest components. It doesn't include insurance or other fees that may be required by the bank.

Q2: 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 interest.

Q3: Are Security Bank rates fixed or variable?
A: This calculator assumes fixed rates. For variable rate loans, payments may change over time.

Q4: What's a typical interest rate?
A: Rates vary based on loan type, term, and creditworthiness. Personal loans typically range from 6% to 24% annually.

Q5: Can I prepay my loan?
A: Security Bank may allow prepayment, possibly with fees. Check your loan agreement for specific terms.