1. What is the Loan Repayment Formula?

The loan repayment formula calculates the fixed monthly payment required to fully repay a loan over its term, including both principal and interest. It's based on the time value of money principle.

2. How Does the Calculator Work?

The calculator uses the standard loan repayment formula:

Where:

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

Explanation: The formula accounts for compound interest over the life of the loan to determine equal monthly payments that will pay off the loan exactly by the end of the term.

3. Importance of Loan Repayment Calculation

Details: Understanding your monthly payment helps with budgeting and ensures the loan is affordable. It also shows the total cost of borrowing (principal + interest).

4. Using the Calculator

Tips: Enter the loan amount in AUD, annual interest rate (without the % sign), and loan term in years. The calculator will show your monthly payment, total repayment, and total interest.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical CommBank personal loan rate?
A: Rates vary (typically 6.99%-19.99% p.a.) depending on loan purpose, amount, term, and your creditworthiness.

Q2: Are there fees not included in this calculation?
A: Yes, CommBank may charge establishment fees ($150-$250) and monthly service fees ($5-$10), which aren't included here.

Q3: Can I make extra repayments?
A: CommBank personal loans typically allow extra repayments without penalty, which would reduce total interest.

Q4: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest. Longer terms reduce monthly payments but increase total interest.

Q5: Is this calculator specific to CommBank Australia?
A: While it uses standard loan formulas, rates and terms should be verified with CommBank as they may have specific products.