Car Loan Payment Formula:
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The car loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term. This is the standard formula used by Commonwealth Bank and most financial institutions for fixed-rate loans.
The calculator uses the standard loan payment formula:
Where:
Explanation: The formula accounts for both principal repayment and interest charges, with payments structured so the loan is fully repaid by the end of the term.
Details: Understanding your monthly payment helps with budgeting and ensures the loan is affordable. It also helps compare different loan offers.
Tips: Enter the loan amount in AUD, annual interest rate as a percentage (e.g., 5.5 for 5.5%), and loan term in years. All values must be positive numbers.
Q1: Does this include CommBank's fees?
A: This calculates principal and interest only. Additional fees may apply - check with CommBank for current fee structures.
Q2: What's a typical car loan rate at CommBank?
A: Rates vary based on creditworthiness, loan term, and vehicle. Check CommBank's website for current rates.
Q3: Can I make extra repayments?
A: CommBank generally allows extra repayments on variable rate loans, but fixed rate loans may have restrictions.
Q4: How does loan term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms have higher payments but lower total cost.
Q5: Is this calculator accurate for all loans?
A: This works for standard fixed-rate loans. Balloon payments or variable rates would require different calculations.