1. What is the Personal Loan Calculator?

The Personal Loan Calculator computes the fixed monthly payment required to repay a loan over a specified period, considering the principal amount and interest rate. It uses the standard amortization formula for installment loans.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

• \( P \) — Principal loan amount (USD)
• \( r \) — Periodic interest rate (decimal)
• \( n \) — Total number of payment periods

Explanation: The formula calculates the fixed payment amount that covers both principal and interest for each period of the loan.

3. Importance of Loan Payment Calculation

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

4. Using the Calculator

Tips: Enter the loan amount in USD, interest rate as a decimal (e.g., 0.05 for 5%), and the total number of payment periods. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is this different from credit card payment calculations?
A: This calculates fixed payments for installment loans. Credit cards typically use variable rates and minimum payment formulas.

Q2: Can I use this for mortgage calculations?
A: Yes, this formula works for any fixed-rate installment loan, including mortgages.

Q3: What if my interest rate is annual but payments are monthly?
A: Convert the annual rate to monthly by dividing by 12 (e.g., 6% annual = 0.005 monthly).

Q4: Does this include fees or insurance?
A: No, this calculates only principal and interest payments. Additional costs would need to be added separately.

Q5: How accurate is this calculator?
A: It provides mathematically precise results for fixed-rate loans, assuming no payment changes or early repayments.