1. What is the Personal Loan Repayment Formula?

The personal loan repayment formula calculates the fixed monthly payment required to repay a loan over a specified term. This is the standard formula used by CommBank and most financial institutions for fixed-rate personal loans.

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 (term in years × 12)
• \( PMT \) — Monthly payment amount (AUD)

Explanation: The formula calculates the fixed payment needed to pay off the loan over the specified term, accounting for compound interest.

3. Importance of Loan Repayment Calculation

Details: Understanding your monthly repayment helps with budgeting and ensures you can comfortably afford the loan. It also allows you to compare different loan options.

4. Using the Calculator

Tips: Enter the loan amount in AUD, annual interest rate (without the % sign), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include loan fees?
A: No, this calculation only includes principal and interest. Additional fees may apply to your loan.

Q2: What's the difference between fixed and variable rates?
A: Fixed rates stay the same for the loan term, while variable rates can change. This calculator assumes a fixed rate.

Q3: How accurate is this calculator?
A: It provides accurate estimates for standard fixed-rate loans, but your actual repayment may vary slightly.

Q4: Can I calculate repayments for different terms?
A: Yes, simply change the loan term to see how it affects your monthly payment.

Q5: How can I reduce my monthly payments?
A: You can reduce payments by choosing a longer loan term or securing a lower interest rate.