1. What is the Personal Loan Borrowing Formula?

The Personal Loan Borrowing Formula calculates how much you can borrow based on your desired monthly payment, interest rate, and loan term. It's particularly useful for Commonwealth Bank personal loan applicants to estimate their borrowing capacity.

2. How Does the Calculator Work?

The calculator uses the borrowing capacity formula:

Where:

• \( P \) — Maximum loan amount (AUD)
• \( PMT \) — Monthly payment amount (AUD)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Total number of payments (months)

Explanation: The formula calculates the present value of a series of future payments (PMT) discounted at the monthly interest rate (r).

3. Importance of Borrowing Capacity Calculation

Details: Knowing your borrowing capacity helps in financial planning, ensures loan affordability, and helps set realistic expectations when applying for a Commonwealth Bank personal loan.

4. Using the Calculator

Tips: Enter your comfortable monthly payment in AUD, the annual interest rate (%), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical interest rate for CommBank personal loans?
A: Rates vary (typically 6.99%-19.99% p.a.) depending on loan purpose, amount, term, and your creditworthiness.

Q2: Does this include loan fees?
A: No, this calculation doesn't include the $150-$250 establishment fee or other potential charges.

Q3: What's the maximum term for CommBank personal loans?
A: Typically up to 7 years for most personal loans, though secured loans may have longer terms.

Q4: How accurate is this calculator?
A: It provides a good estimate, but actual loan amounts may vary based on credit assessment and current offers.

Q5: Can I get pre-approved for a CommBank personal loan?
A: Yes, Commonwealth Bank offers pre-approvals that give you a more accurate borrowing amount without affecting your credit score.