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Interest Formula:
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The Bank Loan Interest Calculator computes the monthly interest payment for loans in the Philippines using the principal balance and annual interest rate. It helps borrowers understand their interest obligations before taking out a loan.
The calculator uses the simple interest formula:
Where:
Explanation: The calculator first converts the annual percentage rate to a monthly decimal rate, then multiplies by the principal amount to determine the monthly interest payment.
Details: Understanding your monthly interest payment helps with financial planning, comparing loan offers, and determining the true cost of borrowing. In the Philippines, interest rates can vary significantly between lenders.
Tips: Enter the principal amount in PHP and the annual interest rate as a percentage (e.g., for 5%, enter 5). All values must be positive numbers.
Q1: Is this calculator specific to Philippine banks?
A: While the formula is universal, this calculator is designed with Philippine peso (PHP) currency and typical Philippine loan terms in mind.
Q2: Does this include other loan fees?
A: No, this calculates only the monthly interest. Philippine loans often have additional charges like processing fees or insurance that aren't included here.
Q3: What's a typical interest rate in the Philippines?
A: As of 2023, personal loan rates range from 6% to 24% annually depending on the bank and borrower's creditworthiness.
Q4: How does this differ from amortization calculations?
A: This shows only the interest portion, while amortization includes both principal and interest payments over the loan term.
Q5: Can I use this for business loans?
A: Yes, the same formula applies, though business loans may have different rate structures or fees.