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 Commonwealth Bank 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 (months)
• \( PMT \) — Monthly payment amount (AUD)

Explanation: The formula accounts for compound interest and spreads payments equally over the loan term.

3. Importance of Accurate Repayment Calculation

Details: Understanding your exact repayment amount helps with budgeting and ensures you can comfortably meet your financial obligations without strain.

4. Using the Calculator

Tips: Enter the loan amount in AUD, annual interest rate (e.g., 9.5 for 9.5%), and loan term in years. The calculator will show monthly payments, total repayment, and total interest.

5. Frequently Asked Questions (FAQ)

Q1: What is the minimum loan amount for Commonwealth Bank personal loans?
A: CommBank typically offers personal loans from A$4,000 to A$50,000, depending on your financial situation.

Q2: Are there any fees not included in this calculation?
A: This calculator doesn't account for establishment fees (typically A$150-$250) or monthly account-keeping fees (usually A$5-$10).

Q3: How accurate is this calculator?
A: It provides accurate estimates for fixed-rate loans. Variable rate loans may have different repayments if rates change.

Q4: Can I make extra repayments on CommBank personal loans?
A: Yes, CommBank generally allows extra repayments on most personal loans without penalty.

Q5: How does loan term affect total interest paid?
A: Longer terms mean lower monthly payments but significantly more interest paid over the life of the loan.