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Loan Payment Formula:
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The loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term, including both principal and interest components. This is the standard formula used by CommBank and most financial institutions for personal loans.
The calculator uses the standard loan payment formula:
Where:
Explanation: The formula accounts for compound interest over the life of the loan, ensuring each payment covers both interest and principal reduction.
Details: Understanding your monthly payment helps with budgeting and financial planning. It also shows the true cost of borrowing through the total interest calculation.
Tips: Enter the loan amount in AUD, annual interest rate as a percentage (e.g., 7.5 for 7.5%), and loan term in years. All values must be positive numbers.
Q1: What is the typical interest rate for CommBank personal loans?
A: As of 2024, rates typically range from 6.99% to 19.99% p.a. depending on loan purpose, amount, and creditworthiness.
Q2: Are there fees not included in this calculation?
A: Yes, CommBank may charge establishment fees (typically $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 paid.
Q4: How does loan term affect my 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 accurate for all loan types?
A: This works for fixed-rate, amortizing personal loans. It doesn't apply to credit cards, lines of credit, or variable-rate loans.