1. What is the Debt Payment Formula?

The debt payment formula calculates the fixed monthly payment required to pay off a credit card or loan balance within a specific timeframe, considering the interest rate. It helps in financial planning to eliminate debt efficiently.

2. How Does the Calculator Work?

The calculator uses the debt payment formula:

Where:

• \( D \) — Monthly payment (Rs)
• \( P \) — Principal balance (Rs)
• \( R \) — Monthly interest rate (annual rate / 12, as decimal)
• \( N \) — Desired payoff time (months)

Explanation: The formula accounts for compound interest over time, calculating the fixed payment needed to amortize the debt completely by the target date.

3. Importance of Debt Payment Calculation

Details: Knowing your required monthly payment helps create a realistic debt payoff plan, avoid prolonged debt, and minimize interest costs.

4. Using the Calculator

Tips: Enter principal balance in Rs, annual interest rate in percentage, and desired payoff time in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How can I pay off debt faster?
A: Increase monthly payments, reduce interest rates (balance transfers), or use debt snowball/avalanche methods to pay off debts strategically.

Q2: What's better - shorter term with higher payments or longer term with lower payments?
A: Shorter terms save on interest but require higher payments. Choose based on your budget and financial goals.

Q3: Does making extra payments help?
A: Yes! Extra payments reduce principal faster, saving interest and shortening payoff time.

Q4: What if I can't afford the calculated payment?
A: Consider extending the payoff period, negotiating lower rates, or finding ways to increase income/reduce expenses.

Q5: How accurate is this calculator?
A: It provides exact calculations for fixed-rate debts. Variable rates or changing balances may affect actual payments.