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 components. This is the standard formula used by Commonwealth Bank and most financial institutions.

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 accounts for compound interest over the life of the loan, ensuring each payment covers both interest and principal.

3. Importance of Loan Repayment Calculation

Details: Understanding your monthly repayment helps with budgeting and financial planning. It allows you to compare different loan options and choose terms that fit your financial situation.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Does this calculator include Commonwealth Bank fees?
A: No, this calculates only principal and interest. Actual repayments may be higher due to account fees or other charges.

Q2: How does changing the term affect repayments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms mean higher monthly payments but less total interest.

Q3: What's the difference between variable and fixed rate calculations?
A: This calculator assumes a fixed rate. For variable rates, repayments may change if interest rates change.

Q4: Can I calculate repayments for extra payments?
A: This shows standard repayments only. Extra payments would reduce the principal faster and shorten the loan term.

Q5: How accurate is this calculator?
A: It provides estimates based on the inputs. For exact figures, consult with Commonwealth Bank directly.