1. What is the PMT Formula?

The PMT (Payment) formula calculates the fixed monthly payment required to repay a loan over a specified term. This is the standard formula used by Union Bank of India and other financial institutions for personal loans.

2. How Does the Calculator Work?

The calculator uses the PMT formula:

Where:

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

Explanation: The formula accounts for compound interest over the loan term to calculate equal monthly payments that fully amortize the loan.

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps with budgeting and comparing loan offers. It shows the true cost of borrowing when interest is factored in.

4. Using the Calculator

Tips: Enter the principal amount in INR, annual interest rate (without the % sign), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is this calculator specific to Union Bank of India?
A: While it uses standard loan calculation methods, actual loan terms may vary by bank and individual creditworthiness.

Q2: What additional costs are not included?
A: This calculates principal and interest only. Processing fees, insurance, or other charges would increase total cost.

Q3: How does interest rate affect payments?
A: Higher rates significantly increase total repayment amount. Even 1% difference can cost thousands over the loan term.

Q4: What's better - shorter or longer term?
A: Shorter terms mean higher monthly payments but less total interest. Longer terms reduce monthly payments but cost more overall.

Q5: Can I prepay my loan?
A: Most banks allow prepayment, sometimes with charges. Prepayment reduces total interest paid.