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 both principal and interest components.

2. How Does the Calculator Work?

The calculator uses the standard loan payment 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 over the life of the loan, ensuring each payment covers both interest and principal reduction.

3. Importance of Loan Calculation

Details: Accurate loan calculations help borrowers understand their repayment obligations, compare loan options, and plan their finances effectively.

4. Using the Calculator

Tips: Enter the principal amount in AUD, annual interest rate as a percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this calculator include CommBank fees?
A: No, this calculates base repayment only. Additional fees may apply to actual CommBank loans.

Q2: How does interest compounding work?
A: Interest compounds monthly, meaning each month's interest is based on the outstanding balance.

Q3: Can I calculate part-month periods?
A: This calculator uses whole years only. For precise calculations, consult a CommBank lending specialist.

Q4: Why are my actual payments different?
A: Actual payments may vary due to fees, payment frequency, or rate changes for variable loans.

Q5: How accurate is this calculator?
A: This provides an estimate only. For exact figures, request a formal quote from CommBank.