Loan And Mortgage Calculator

Monthly Payment Formula:

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

Monthly Payment (USD):

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1. What is a Loan and Mortgage Calculator?

Definition: This calculator determines the fixed monthly payment required to repay a loan or mortgage over a specified term.

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

2. How Does the Calculator Work?

The calculator uses the formula:

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

Where:

\( M \) — Monthly payment (USD)
\( P \) — Loan principal amount (USD)
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Total number of payments (term in years × 12)

Explanation: This formula accounts for both principal repayment and interest charges over the loan term.

3. Importance of Loan Payment Calculation

Details: Accurate payment calculation helps with budgeting, loan comparison, and financial planning.

4. Using the Calculator

Tips: Enter the loan amount, 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. For a complete mortgage payment, add property taxes and insurance.

Q2: How does loan term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid over the loan life.

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 borrowing cost.

Q4: Can I use this for other types of loans?
A: Yes, it works for any fixed-rate installment loan (car loans, personal loans, etc.).

Q5: How accurate is this calculator?
A: It provides precise calculations for fixed-rate loans, but actual payments may vary slightly due to rounding.