1. What is the Loan Payment Formula?

The loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term, including interest. This is the standard formula used by Commonwealth Bank for joint personal loans.

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)

Explanation: The formula accounts for compound interest over the life of the loan, calculating a fixed payment that covers both principal and interest.

3. Importance of Loan Payment Calculation

Details: Understanding your monthly payment helps with budgeting and ensures you can comfortably afford the loan repayments before committing to a joint personal loan.

4. Using the Calculator

Tips: Enter the principal 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.

5. Frequently Asked Questions (FAQ)

Q1: What is a joint personal loan?
A: A loan taken out by two people who share equal responsibility for repayments, typically offering higher borrowing power than individual loans.

Q2: How does Commonwealth Bank calculate interest?
A: CommBank uses daily compounding interest, but this calculator provides a close estimate using standard monthly compounding.

Q3: Are there fees not included in this calculation?
A: Yes, there may be establishment fees, monthly service fees, or early repayment fees not reflected in this calculation.

Q4: What loan terms does CommBank offer?
A: Typically 1-7 years for personal loans, but joint loans may have different terms - check with CommBank for current offerings.

Q5: How accurate is this calculator?
A: This provides a good estimate, but actual payments may vary slightly due to rounding or specific bank policies.