1. What is the Loan Payment Formula?

The PMT formula calculates the fixed monthly payment required to repay a loan over a specified term, including interest. It's the standard formula used by banks and financial institutions for 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 (loan term in years × 12)
• \( PMT \) — Monthly payment amount (AUD)

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

3. Importance of Loan Repayment Calculation

Details: Understanding your monthly payment helps with budgeting and comparing loan options. It shows the true cost of borrowing through the total interest paid.

4. Using the Calculator

Tips: Enter the loan 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 include NAB's loan fees?
A: No, this calculates principal and interest only. NAB may charge additional fees that affect the total cost.

Q2: How accurate is this calculator?
A: It provides exact mathematical results for fixed-rate loans. Actual bank calculations may vary slightly due to rounding.

Q3: Can I use this for other types of loans?
A: Yes, it works for any fixed-term, fixed-rate loan (personal, auto, etc.), but not for credit cards or variable-rate loans.

Q4: What if I make extra payments?
A: Extra payments reduce principal faster, saving interest. This calculator assumes no extra payments.

Q5: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest. Longer terms reduce monthly payments but increase total interest.