# Loan Repayment Calculator

Instructions:
• Enter your Loan Amount, Annual Interest Rate, Loan Term, and Extra Payment (if any).
• Click "Calculate" to see the loan repayment details.
• Your calculation history will be displayed below.
• Click on a history entry to populate the form with the saved values.
• Click "Clear Form" to reset the form.
• Click "Copy Results" to copy the current calculation results to the clipboard.

Loan Repayment Results

Monthly Payment:

Total Payment:

Total Interest Paid:

Loan Payoff Date:

Calculation History

A Loan Repayment Calculator is a financial tool designed to provide borrowers with a clear picture of their loan repayment schedule. This tool considers various inputs such as the loan amount, interest rate, loan term, and repayment frequency to calculate the periodic repayment amount, total interest payable, and the total amount to be repaid over the life of the loan.

## Concept and Functionality

### Understanding the Basic Terms

• Principal: The original sum of money borrowed.
• Interest Rate: The percentage charged on the principal by the lender.
• Loan Term: The duration over which the loan is to be repaid.
• Repayment Frequency: How repayments are made (e.g., monthly, fortnightly, or weekly).

### How Loan Repayment Calculators Work

Loan Repayment Calculators use mathematical formulas to compute the repayment amount. The most common method used is the annuity formula, which calculates equal periodic payments necessary to ensure the loan is paid off by the end of its term, including interest.

## Related Formulae

### The Annuity Formula

The annuity formula is used to calculate the periodic payment (A) on a loan. The formula is:

`A = P * [r(1 + r)^n] / [(1 + r)^n - 1]`

where:

• A is the periodic payment amount.
• P is the principal amount (initial loan amount).
• r is the periodic interest rate (annual interest rate divided by the number of periods per year).
• n is the total number of payments (loan term in years multiplied by the number of periods per year).

### Calculating the Total Interest Paid

The total interest paid over the life of the loan can be calculated as follows:

`Total Interest = (A * n) - P`

where:

• A is the periodic payment amount.
• n is the total number of payments.
• P is the principal amount.

## Benefits of Using a Loan Repayment Calculator

### Informed Financial Planning

Borrowers can understand the financial commitment involved in a loan, helping them to budget and plan their finances effectively.

### Comparison of Loan Offers

By varying the interest rates and loan terms, borrowers can compare different loan offers to find the most cost-effective option.

### Understanding the Impact of Additional Payments

Borrowers can calculate how making extra payments or lump sum payments can reduce the total interest paid and shorten the loan term.

### Transparency

Loan Repayment Calculators promote transparency by clearly outlining the cost of the loan, including how much interest will be paid over its lifetime.

## Interesting Facts

• The concept of interest dates back to ancient civilizations, where lending of grain or other goods was common, and interest was paid in kind.
• The use of technology in financial calculations, like Loan Repayment Calculators, has significantly increased the accessibility and understanding of complex financial products for the average person.

## Conclusion

Loan Repayment Calculators are essential tools for anyone considering a loan. They provide valuable insights into the repayment structure, help in financial planning, and ensure borrowers are informed about their financial commitments. By understanding and utilizing these tools, borrowers can make wise decisions and effectively manage their debts.

References

For more detailed and scholarly information, the following references can be consulted:

1. “Principles of Corporate Finance” by Richard A. Brealey, Stewart C. Myers, and Franklin Allen. This book provides a comprehensive overview of corporate finance, including detailed sections on the time value of money and loan calculations.
2. “Mathematics for Economics and Business” by Ian Jacques. This book offers an in-depth look at mathematical methods and formulas used in economics and business, including loan repayment calculations.
3. “The Economics of Money, Banking, and Financial Markets” by Frederic S. Mishkin. This book provides insights into how the financial system works, including the structure of interest rates and the cost of borrowing.

Last Updated : 13 February, 2024

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