1. What is the Loan Payment Formula?

The loan payment formula calculates the fixed monthly payment required to fully repay a loan over its term, including interest. The formula accounts for compound interest and amortization of the loan.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

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

Extra Payments: Additional payments reduce the principal faster, saving interest and potentially shortening the loan term.

3. Importance of Loan Calculation

Details: Understanding your loan payments helps with budgeting and shows how extra payments can save money on interest and reduce loan duration.

4. Using the Calculator

Tips: Enter the loan amount in AUD, annual interest rate as a percentage, loan term in years, and any additional monthly payment you plan to make.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments affect my loan?
A: Extra payments directly reduce your principal, which decreases total interest paid and may shorten your loan term.

Q2: What's the difference between standard and extra payment results?
A: The standard payment is the minimum required. The extra payment result shows your planned payment including additional amounts.

Q3: Are CommBank personal loan rates fixed or variable?
A: CommBank offers both fixed and variable rate personal loans. This calculator works for either type.

Q4: How often can I make extra payments?
A: With CommBank, you can typically make extra payments anytime, but check your specific loan terms for any restrictions.

Q5: Does this calculator account for fees?
A: No, this calculates principal and interest only. Actual loans may have establishment fees or other charges.