1. What is a Loan Repayment Calculator?

Definition: This calculator determines the monthly payment, total payment, and total interest for a fixed-rate loan.

Purpose: It helps borrowers understand their repayment obligations and compare different loan options.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( M \) — Monthly payment ($)
• \( P \) — Principal loan amount ($)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of payments (loan term in years × 12)

Explanation: The formula calculates the fixed payment amount required to pay off a loan with interest over a specified term.

3. Importance of Loan Repayment Calculation

Details: Understanding your repayment schedule helps with budgeting, financial planning, and comparing loan offers.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, and loan term in years. 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. It doesn't include taxes, insurance, or other fees.

Q2: How does the interest rate affect payments?
A: Higher rates increase both monthly payments and total interest paid over the loan term.

Q3: What's the difference between total payment and total interest?
A: Total payment is principal plus all interest. Total interest is the extra cost of borrowing.

Q4: Can I calculate payments for different compounding periods?
A: This calculator assumes monthly compounding. Other periods require formula adjustments.

Q5: How accurate are these calculations?
A: They're mathematically precise for fixed-rate loans. Actual payments may vary with fees or rate changes.