Bankwest Loan Repayment Calculator

Loan Repayment Formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Monthly Payment (PMT):

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1. What is the Loan Repayment Formula?

The loan repayment formula calculates the fixed monthly payment required to repay a loan over a specified term. It accounts for the principal amount, interest rate, and loan duration to determine regular payments that will fully amortize the loan.

2. How Does the Calculator Work?

The calculator uses the standard loan repayment formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Where:

\( P \) — Principal loan amount (AUD)
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Total number of payments (term in years × 12)
\( PMT \) — Monthly payment amount (AUD)

Explanation: The formula calculates the fixed payment needed to pay off the loan with interest by the end of the term, with each payment covering both principal and interest.

3. Importance of Loan Calculation

Details: Accurate loan repayment calculation helps borrowers understand their financial commitments, compare loan options, and budget effectively for the loan duration.

4. Using the Calculator

Tips: Enter the principal amount in AUD, annual interest rate as a percentage (e.g., 5.25 for 5.25%), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include fees and charges?
A: This calculation only includes principal and interest. Additional fees (establishment fees, account fees) may apply to actual loans.

Q2: What's the difference between principal and interest?
A: Principal is the amount borrowed; interest is the cost of borrowing. Early payments are mostly interest; later payments apply more to principal.

Q3: How does loan term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms mean higher payments but less total interest.

Q4: Can I make extra repayments?
A: Many Bankwest loans allow extra repayments which can reduce total interest and loan term. Check specific loan terms.

Q5: What if my interest rate changes?
A: For variable rate loans, payments may adjust if rates change. Fixed rate loans maintain the same payment for the fixed term.