Business Loan Repayment Calculator Aussie

Business Loan Repayment Formula:

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

Loan Amount (P):

AUD

Annual Interest Rate:

Loan Term:

years

Payment Frequency:

Payment Amount (PMT):

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1. What is the Business Loan Repayment Formula?

The business loan repayment formula calculates the fixed periodic payment amount required to repay a loan over a specified term, including interest. It's commonly used by Australian businesses to plan their loan repayments.

2. How Does the Calculator Work?

The calculator uses the standard loan repayment formula:

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

Where:

\( PMT \) — Periodic payment amount (AUD)
\( P \) — Principal loan amount (AUD)
\( r \) — Periodic interest rate (annual rate divided by number of payments per year)
\( n \) — Total number of payments (loan term in years multiplied by payments per year)

Explanation: The formula accounts for both principal repayment and interest charges, with payments remaining constant throughout the loan term.

3. Importance of Loan Repayment Calculation

Details: Accurate repayment calculation helps businesses budget cash flow, compare loan options, and understand the total cost of borrowing.

4. Using the Calculator

Tips: Enter loan amount in AUD, annual interest rate as a percentage, loan term in years, and select payment frequency. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between monthly and fortnightly payments?
A: Fortnightly payments can reduce total interest paid and shorten loan term as you make 26 payments/year (equivalent to 13 monthly payments).

Q2: Are Australian business loan rates different from personal loans?
A: Yes, business loan rates typically vary based on factors like business size, industry risk, and loan security.

Q3: Does this include loan fees and charges?
A: No, this calculates principal and interest only. Additional fees may apply to actual loans.

Q4: How does loan term affect repayments?
A: Shorter terms mean higher repayments but less total interest. Longer terms reduce periodic payments but increase total interest cost.

Q5: Is this calculator specific to Australian loans?
A: While the formula is universal, this calculator defaults to AUD currency and common Australian payment frequencies.