1. What is the Monthly Payment Formula?

The monthly payment formula calculates the fixed payment amount required each month to pay off a personal loan over 18 months, including interest. It accounts for the principal amount, interest rate, and fixed loan term.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( Principal \) — Original loan amount in dollars
• \( r \) — Monthly interest rate (APR divided by 12, in decimal form)
• \( 18 \) — Fixed loan term in months

Explanation: The formula calculates the fixed payment needed each month to completely pay off the loan (principal + interest) over exactly 18 months.

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps with budgeting and ensures you can comfortably afford the loan payments before committing to the loan.

4. Using the Calculator

Tips: Enter the principal loan amount in dollars and the annual percentage rate (APR). The calculator assumes a fixed 18-month term for all calculations.

5. Frequently Asked Questions (FAQ)

Q1: Why is the term fixed at 18 months?
A: This calculator is specifically designed for 18-month personal loans. Different terms would require different calculations.

Q2: Does this include any loan fees?
A: No, this calculates only the principal and interest payments. Any origination fees or other charges would need to be added separately.

Q3: How does APR differ from interest rate?
A: APR includes both the interest rate and any lender fees, giving a more complete picture of the loan's cost.

Q4: What if I want a different loan term?
A: You would need a different calculator that allows you to specify the loan term in months.

Q5: Is this calculation accurate for all loan types?
A: This is specifically for fixed-rate personal loans with equal monthly payments. Other loan types may use different calculations.