1. What is the Car Loan Repayment Formula?

The car loan repayment formula calculates the fixed periodic payment required to pay off a car loan over a specified term, including interest. This is the standard formula used by Australian lenders for fixed-rate car loans.

2. How Does the Calculator Work?

The calculator uses the PMT formula:

Where:

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

Explanation: The formula calculates the fixed payment needed to pay off the loan over the specified term, accounting for compound interest.

3. Importance of Loan Repayment Calculation

Details: Understanding your car loan repayments helps with budgeting and ensures you can comfortably afford the vehicle. It also helps compare different loan offers.

4. Using the Calculator

Tips: Enter the loan amount in AUD, annual interest rate as a percentage, loan term in years, and select your preferred 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 save you interest over the life of the loan as you make 26 payments per year (equivalent to 13 monthly payments).

Q2: Are there any fees not included in this calculation?
A: This calculator doesn't account for establishment fees, monthly service fees, or balloon payments that some loans may have.

Q3: How accurate is this calculator?
A: It provides a good estimate for fixed-rate loans. Actual payments may vary slightly due to rounding by lenders.

Q4: What's a typical car loan term in Australia?
A: Most car loans range from 1-7 years, with 3-5 years being most common.

Q5: Can I use this for variable rate loans?
A: This calculator assumes a fixed interest rate. Variable rates may change over the loan term.