Question 1

How is loan payment calculated?

Accepted Answer

Loan payment is calculated using the annuity formula based on loan amount, interest rate, and term. Same amount is paid each month.

Question 2

How does interest rate affect?

Accepted Answer

As interest rate increases, monthly payment and total payment increase. Even 1% difference can make a big impact over time.

Question 3

Is early payment beneficial?

Accepted Answer

Yes, paying off the loan early reduces total interest cost. Extra payments directly reduce principal balance.

Question 4

Difference between mortgage and auto loan?

Accepted Answer

Mortgages have longer terms (120-360 months) and lower rates. Auto loans have shorter terms (12-60 months) and higher rates.

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