1. What is the Loan Repayment Calculator?

The Loan Repayment Calculator helps you determine your monthly payment amount for a fixed-rate loan. It uses the standard amortization formula to calculate exactly how much you'll need to pay each month based on your loan amount, interest rate, and term.

2. How Does the Calculator Work?

The calculator uses the loan repayment formula:

Where:

• \( PMT \) — Monthly payment (GBP)
• \( P \) — Loan principal amount (GBP)
• \( r \) — Annual interest rate (decimal)
• \( t \) — Loan term in years

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

3. Importance of Loan Repayment Calculation

Details: Understanding your monthly payment helps with budgeting, comparing loan offers, and making informed financial decisions. It shows the true cost of borrowing over time.

4. Using the Calculator

Tips: Enter the loan amount in GBP, annual interest rate as a percentage (e.g., 5.5 for 5.5%), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this calculator work for all types of loans?
A: This calculator is designed for fixed-rate amortizing loans, which include most mortgages, auto loans, and personal loans.

Q2: Why is my actual payment slightly different?
A: Actual payments may vary due to rounding, fees, or insurance that might be included in your payment but not in this calculation.

Q3: Can I use this for credit card debt?
A: This calculator is not ideal for credit cards, which typically have variable rates and minimum payment structures.

Q4: How does extra payments affect my loan?
A: Extra payments reduce your principal faster, which decreases the total interest paid and can shorten your loan term.

Q5: What's the difference between interest rate and APR?
A: The interest rate is the cost of borrowing the principal, while APR includes additional fees and costs associated with the loan.