1. What is the Loan Balance Calculator?

The Loan Balance Calculator estimates the remaining balance on a loan in the UK after a certain number of payments have been made. It considers the initial principal, interest rate, number of payments made, and payment amount.

2. How Does the Calculator Work?

The calculator uses the loan balance formula:

Where:

• \( PV \) — Initial principal amount (GBP)
• \( r \) — Monthly interest rate (decimal)
• \( k \) — Number of payments made
• \( PMT \) — Monthly payment amount (GBP)

Explanation: The formula calculates how much of the loan principal remains after accounting for the payments made and interest accrued.

3. Importance of Loan Balance Calculation

Details: Knowing your remaining loan balance helps with financial planning, refinancing decisions, and understanding how much equity you have in an asset.

4. Using the Calculator

Tips: Enter all values in GBP. The monthly interest rate should be entered as a decimal (e.g., 0.005 for 0.5%). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert APR to monthly rate?
A: Divide the annual percentage rate (APR) by 12 (for months) and then by 100 to convert to decimal.

Q2: Does this work for any type of loan?
A: This formula works for standard amortizing loans (most mortgages, car loans, etc.) but not for interest-only loans.

Q3: Why might my actual balance differ?
A: Actual balances may differ due to payment timing, additional fees, or if you've made extra payments.

Q4: Can I use this for early repayment calculations?
A: Yes, this can help estimate how much you'd need to pay to fully settle a loan early.

Q5: How accurate is this calculator?
A: It's mathematically precise for fixed-rate loans when all inputs are accurate. Variable rate loans would require recalculating as rates change.