1. What is the Australian Loan Payoff Formula?

The Australian Loan Payoff Formula calculates how long it will take to pay off a loan based on your monthly payment amount, principal, and interest rate. This is particularly useful for Australian mortgages and personal loans.

2. How Does the Calculator Work?

The calculator uses the loan payoff formula:

Where:

• \( n \) — Number of months to payoff
• \( PMT \) — Monthly payment amount (AUD)
• \( P \) — Principal loan amount (AUD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)

Explanation: The formula calculates how many monthly payments are required to completely pay off the loan principal and interest.

3. Importance of Loan Payoff Calculation

Details: Knowing your payoff time helps with financial planning, comparing loan options, and understanding how extra payments can shorten your loan term.

4. Using the Calculator

Tips: Enter your regular monthly payment amount, the original loan amount, and your annual interest rate. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this work for interest-only loans?
A: No, this calculator is for principal-and-interest loans only.

Q2: What if I make extra payments?
A: The calculator shows payoff time for your current payment amount only. Extra payments would shorten the term.

Q3: Are Australian loan calculations different?
A: Australian loans typically use monthly compounding like this formula assumes, unlike some countries that use daily compounding.

Q4: Why does my bank give a different term?
A: Banks may include fees or use slightly different rounding methods in their calculations.

Q5: Can I use this for credit cards?
A: This is designed for fixed-rate loans. Credit cards typically have variable rates and minimum payments that change as balance decreases.