1. What is the Car Loan Payment Formula?

The car loan payment formula calculates the fixed monthly payment required to repay a car loan over a specified term. This formula is used by Commonwealth Bank and most Australian lenders to determine loan repayments.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

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

Explanation: The formula accounts for compound interest and spreads the repayment equally over the loan term.

3. Importance of Loan Calculation

Details: Understanding your monthly payments helps with budgeting and comparing different loan options from Commonwealth Bank or other lenders.

4. Using the Calculator

Tips: Enter the loan amount in AUD, annual interest rate (Commonwealth Bank's current rate), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is Commonwealth Bank's typical car loan rate?
A: Rates vary (currently ~5-10% p.a.), depending on credit score, loan term, and whether the car is new or used.

Q2: Does this include other fees?
A: No, this calculates principal and interest only. Commonwealth Bank may charge additional fees like establishment fees.

Q3: Can I make extra repayments?
A: Commonwealth Bank generally allows extra repayments on variable rate car loans, which can reduce total interest.

Q4: What's the maximum loan term available?
A: Commonwealth Bank offers terms typically up to 7 years for car loans.

Q5: Is the interest rate fixed or variable?
A: Commonwealth Bank offers both options - fixed rates provide certainty, while variable rates may offer more flexibility.