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, 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 standard PMT formula:

Where:

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

Explanation: The formula accounts for compound interest over the life of the loan, spreading payments equally over each month.

3. Importance of Loan Calculation

Details: Understanding your monthly payments helps with budgeting and comparing loan offers from different Australian lenders.

4. Using the Calculator

Tips: Enter the loan amount in AUD, annual interest rate (typical rates in Australia range from 3% to 15%), and loan term in years (common terms are 3-7 years).

5. Frequently Asked Questions (FAQ)

Q1: Does this include Australian stamp duty?
A: No, this calculates principal and interest only. Stamp duty and other fees vary by Australian state.

Q2: What's a typical car loan term in Australia?
A: Most car loans in Australia are for 3-7 years, with 5 years being common.

Q3: Are rates fixed or variable?
A: This calculator assumes fixed rates. Variable rate loans may have different payment structures.

Q4: What's a good interest rate in Australia?
A: As of 2024, rates between 5-8% are competitive for borrowers with good credit.

Q5: Does this work for novated leases?
A: No, novated leases have different tax implications and calculations.