Loan Repayment Calculator
Description & Definition
The Repayment Calculator is a user-friendly tool designed to help users estimate their monthly loan repayments based on the principal amount, interest rate, and loan tenure. The calculator provides a clear breakdown of total payments, total interest paid, and a visual representation of repayment distribution using a pie chart.
User Interface (UI)
The UI of the Repayment Calculator is designed for simplicity and responsiveness:
- Input Fields: Users can enter the loan amount, annual interest rate, and loan term.
- Calculate Button: Triggers the repayment calculation.
- Results Section: Displays monthly payment, total payments, total amount paid, and total interest.
- Pie Chart: Provides a graphical representation of the principal vs. interest paid.
- Responsive Design: Ensures a seamless experience on all devices (desktop, tablet, and mobile).
Formula Used
The repayment calculation is based on the standard loan amortization formula:
M = (P × r) ÷ (1 − (1 + r)-n)
Where:
- M = Monthly Payment
- P = Principal Loan Amount
- r = Monthly Interest Rate (Annual Rate / 12 / 100)
- n = Total Number of Payments (Loan Term × 12)
Uses of the Repayment Calculator
- Loan Planning: Helps individuals plan their loan repayments before taking a loan.
- Interest Estimation: Provides insights into how much interest will be paid over time.
- Budgeting: Assists in financial planning by showing the monthly repayment burden.
- Loan Comparison: Users can compare different loan options based on interest rates and terms.
Benefits of Using the Calculator
✔ Quick & Easy Calculations – Saves time by instantly computing loan repayments.
✔ Accurate Results – Uses a precise formula to calculate loan amortization.
✔ Better Financial Management – Helps users plan their finances efficiently.
✔ Graphical Representation – The pie chart makes it easy to visualize loan structure.
✔ Device Friendly – Works seamlessly across desktops, tablets, and smartphones.
Example Calculation
Let’s say a user wants to borrow $100,000 at an annual interest rate of 5% for 10 years.
- Loan Amount (P): 100,000
- Annual Interest Rate: 5%
- Loan Term: 10 years
- Monthly Interest Rate (r): 5% ÷ 12 = 0.004167
- Total Payments (n): 10 × 12 = 120 months
Using the formula: M = (100000 × 0.004167) ÷ (1 − (1 + 0.004167)-120)
The monthly payment comes out to be 1,061.23.
- Total Amount Paid: 127,347.00
- Total Interest Paid: 27,347.00
The pie chart visually represents that a significant portion of the repayment goes toward interest, especially in the early months.
FAQs – Loan Repayment Calculator
Q1: How is interest calculated in the repayment calculator?
A: The calculator uses compound interest amortization to distribute interest and principal payments over time.
Q2: Can I use this for mortgage calculations?
A: Yes! This calculator works for mortgages, home loans, personal loans, and car loans.
Q3: Is this calculator mobile-friendly?
A: Absolutely! It is optimized for mobile, tablet, and desktop users.