1. What is the Personal Loan Payment Formula?

The personal loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term. This formula is commonly used by Commonwealth Bank and other financial institutions for personal loans.

2. How Does the Calculator Work?

The calculator uses the personal loan payment formula:

Where:

• \( P \) — Principal loan amount (AUD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of monthly payments (term in years × 12)
• \( PMT \) — Monthly payment amount (AUD)

Explanation: The formula accounts for both principal and interest payments, with the interest portion being higher at the beginning of the loan term.

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps with budgeting and ensures the loan is affordable. It also helps compare different loan offers.

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: What interest rates does CommBank offer?
A: Commonwealth Bank personal loan rates vary (typically 6.99%-19.99% p.a.) depending on credit score, loan amount, and term.

Q2: Are there any fees not included in this calculation?
A: Yes, CommBank may charge establishment fees ($150-$250) and monthly fees ($10) which aren't included here.

Q3: Can I make extra repayments?
A: CommBank personal loans typically allow extra repayments without penalty, which would reduce total interest.

Q4: How accurate is this calculator?
A: This provides an estimate. Actual payments may vary slightly due to rounding or specific loan terms.

Q5: Does this work for other types of loans?
A: This formula works for fixed-rate personal loans. Credit cards, mortgages, and variable-rate loans use different calculations.