Payment Calculator Per Month

Monthly Payment Formula:

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

Monthly Payment (PMT):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is the Monthly Payment Calculator?

The Monthly Payment Calculator calculates the fixed monthly payment amount for a loan using the standard amortization formula. It helps borrowers understand their monthly financial commitment for various types of loans including mortgages, car loans, and personal loans.

2. How Does the Calculator Work?

The calculator uses the PMT formula:

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

Where:

\( PMT \) — Monthly payment (currency/month)
\( P \) — Principal loan amount (currency)
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Total number of payments (months)

Explanation: This formula calculates the fixed monthly payment required to fully amortize a loan over its term, accounting for both principal and interest components.

3. Importance of Monthly Payment Calculation

Details: Understanding monthly payments is crucial for financial planning, budgeting, and comparing different loan options. It helps borrowers assess affordability and make informed borrowing decisions.

4. Using the Calculator

Tips: Enter the principal amount in currency, annual interest rate as a percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What types of loans use this formula?
A: This formula is used for fixed-rate amortizing loans including mortgages, auto loans, personal loans, and student loans.

Q2: Does this include taxes and insurance?
A: No, this calculates only the principal and interest portion. Additional costs like property taxes, insurance, and PMI are separate.

Q3: How does loan term affect monthly payments?
A: Longer terms result in lower monthly payments but higher total interest paid over the life of the loan.

Q4: What if I want to make extra payments?
A: Extra payments reduce the principal faster, potentially shortening the loan term and reducing total interest paid.

Q5: Are there different payment calculation methods?
A: Yes, some loans use simple interest or have different payment structures, but this formula is standard for most fixed-rate installment loans.