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A personal loan calculator is a useful financial tool that helps you find out the monthly instalment payable to the bank when you wish to take out a personal loan.
Benefits of Using Personal Loan Calculator
The benefits of using a personal loan calculator are:
- You can be aware of the monthly instalment you must pay for a specified loan amount.
- You can figure out if the loan and the monthly instalments are affordable.
- You can negotiate with the possible variations of the loan amount to make your monthly instalments affordable.
- Rather than blindly taking a personal loan, you can now have a better idea on how the interest and principal of the loan is serviced.
How are Personal Loan Repayments Calculated?
You can calculate the personal loan repayment instalment manually, on a bank’s personal loan calculator page, on a general personal loan instalment calculator page or on an excel sheet. On a calculator page, the script will calculate the monthly instalments for you.
You must use the simple interest formula to find out the interest to be paid per year:
P stands for the principal loan amount
T stands for the personal loan tenure in years
R stands for the rate of interest per year
You can find the monthly interest by dividing the interest per year by 12.
The principal component in the monthly instalment can be calculated by dividing the principal loan amount by the number of instalments you need. The sum of the interest component and the principal component will give you the actual monthly instalment payable.
How to Use Personal Loan Calculator?
When you want to calculate the monthly personal loan repayment instalment, you must provide details of the loan. The variables required are the loan amount, the loan tenure and the rate of interest. Take care to enter the loan amount in Malaysian Ringgit. Usually, the interest rate may be required to be entered in % p.a. and the loan tenure in terms of months or years depending on the calculator page you are using. Once you enter these details, click on ‘Calculate’ button to see the monthly instalment specified in Malaysian Ringgit. This amount will include a portion of the principal to be repaid in addition to the interest component.
Features of a Personal Loan Calculator
The features of a personal loan calculator are:
- You can estimate the monthly loan repayment amount.
- You can get an outline on the interest to be paid on a planned principal amount throughout the loan period.
- You can also figure out a balance repayment table on a specified loan amount for a set tenure at a defined interest rate.
Personal Loan Amortisation
Let us consider a personal loan of RM10,000 for a period of one year at an interest rate of 12% p.a. According to the calculations, you will have to pay a monthly instalment of RM888.49. And, the total amount you will have to pay on interest is RM661.85. The personal loan amortisation calculation for this case is shown in the table below:
|Month||Reduction in Principal||Interest Component||Loan Balance|
Factors that Affect Personal Loan Repayment in Malaysia
The factors that affect personal loan repayment in Malaysia are:
- The loan tenure that you have chosen.
- The principal loan amount you have borrowed from the bank.
- The rate of interest at which the loan was approved.
- Whether the rate of interest is fixed or floating. If the rate of interest is fixed, the monthly instalments are constant. If the rate of interest is floating, then the monthly instalments are calculated based on the fluctuating rates every month.