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Loan Payment Formula:
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The loan payment formula calculates the fixed monthly payment required to fully repay a loan over its term, including both principal and interest components.
The calculator uses the standard loan payment formula:
Where:
Explanation: The formula accounts for compound interest over the loan term, calculating a payment that will completely amortize the loan by the end of the term.
Details: Understanding your repayment schedule helps with budgeting and financial planning. It shows how much of each payment goes toward interest versus principal, and how the loan balance decreases over time.
Tips: Enter the principal amount in AUD, the annual interest rate (e.g., 9.5 for 9.5%), and the loan term in years. The calculator will show your monthly payment and full repayment schedule.
Q1: What happens if I make extra payments?
A: Extra payments reduce the principal faster, decreasing total interest paid and potentially shortening the loan term.
Q2: How does interest rate affect my payments?
A: Higher rates increase both your monthly payment and total interest paid. Even small rate differences can have significant long-term impacts.
Q3: What's the difference between principal and interest?
A: Principal is the amount you borrowed. Interest is the cost of borrowing that money. Early payments are mostly interest; later payments are mostly principal.
Q4: Can I change my loan term after starting?
A: Some lenders allow term adjustments, but this may involve fees or new loan terms. Check with your lender for options.
Q5: Are there fees not included in this calculation?
A: This calculator doesn't account for origination fees, late fees, or other charges that may apply to your loan.