Simple Loan Calculator Bankrate Mortgage

Bankrate Mortgage Formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Monthly Payment (PMT):

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1. What is the Bankrate Mortgage Formula?

The Bankrate Mortgage Formula calculates fixed monthly loan payments based on principal amount, interest rate, and loan term. It's widely used for mortgages, auto loans, and other installment loans.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Where:

\( P \) — Principal loan amount (USD)
\( r \) — Monthly interest rate (annual rate ÷ 12 ÷ 100)
\( n \) — Total number of payments (loan term in years × 12)
\( PMT \) — Monthly payment amount (USD)

Explanation: The formula accounts for compound interest over the life of the loan, calculating equal monthly payments that pay off the loan completely by the end of the term.

3. Importance of Accurate Loan Calculations

Details: Understanding your exact monthly payment helps with budgeting, comparing loan offers, and making informed financial decisions about large purchases.

4. Using the Calculator

Tips: Enter the total loan amount (principal), annual interest rate (APR), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include taxes and insurance?
A: No, this calculates only the principal and interest portion. For a complete mortgage payment, you'd need to add property taxes, insurance, and possibly PMI.

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: What's the difference between APR and interest rate?
A: APR includes both interest rate and loan fees, giving a more complete picture of loan cost. This calculator uses the interest rate for payment calculation.

Q4: Can I calculate payments for biweekly loans?
A: For biweekly payments, divide the monthly payment by 2 and multiply the term months by 2 (though actual savings may vary).

Q5: How accurate is this calculator?
A: This provides standard fixed-rate loan calculations. Actual lender payments may vary slightly due to rounding methods or specific loan terms.