1. What is the Remaining Balance Formula?

The remaining balance formula calculates how much you still owe on a loan or credit card after making a certain number of payments. It accounts for both principal and interest payments over time.

2. How Does the Calculator Work?

The calculator uses the remaining balance formula:

Where:

• \( P \) — Original principal amount
• \( R \) — Monthly interest rate (APR / 12)
• \( N \) — Total loan tenure in months
• \( M \) — Number of payments made

Explanation: The formula calculates the remaining balance by determining how much of the original principal would need to be paid off given the payments made so far.

3. Importance of Calculating Remaining Balance

Details: Knowing your remaining balance helps with financial planning, refinancing decisions, and understanding how much interest you're paying over the life of the loan.

4. Using the Calculator

Tips: Enter the original loan amount, annual percentage rate (APR), total loan term in months, and how many payments you've made so far. All values must be valid (principal > 0, APR ≥ 0, tenure > 0).

5. Frequently Asked Questions (FAQ)

Q1: Does this work for credit cards?
A: Yes, this formula works for any fixed payment loan, including credit cards if you're making consistent monthly payments.

Q2: What if I make extra payments?
A: This calculator assumes fixed regular payments. For variable payments, you'll need a more advanced amortization calculator.

Q3: Why does my balance decrease slowly at first?
A: Early payments go mostly toward interest. As the principal decreases, more of each payment goes toward the principal.

Q4: How accurate is this calculation?
A: It's mathematically precise for fixed-rate loans with consistent payments. For variable-rate loans, it provides an estimate.

Q5: Can I use this for mortgage calculations?
A: Yes, this formula works for mortgages as long as they have fixed payments and interest rates.