1. What is the Monthly Repayment Formula?

The monthly repayment formula calculates the fixed payment amount required to repay a loan over a specified term, including both principal and interest components.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

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

Explanation: The formula accounts for the time value of money, calculating equal payments that will pay off the loan plus interest over the specified term.

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps with budgeting and comparing different loan options. It shows how much you'll pay each month and the total interest over the loan's life.

4. Using the Calculator

Tips: Enter the principal amount in USD, annual interest rate as a percentage, 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 principal and interest. Mortgage payments often include escrow for taxes and insurance which would be additional.

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 fees and other loan costs, while the interest rate is just the cost of borrowing the principal.

Q4: Can I use this for any type of loan?
A: This works for standard amortizing loans (mortgages, auto loans, personal loans). It doesn't apply to interest-only loans or credit cards.

Q5: How can I pay less interest overall?
A: Make additional principal payments when possible, choose a shorter loan term, or secure a lower interest rate.