Loan Payment Formula:
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The personal loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term. This is the standard formula used by Commonwealth Bank and most financial institutions for fixed-rate personal loans.
The calculator uses the loan payment formula:
Where:
Explanation: The formula accounts for both principal and interest payments over the loan term, with interest calculated on the remaining balance each month.
Details: Understanding your monthly payment helps with budgeting and ensures the loan is affordable. It also allows comparison between different loan terms and interest rates.
Tips: Enter the loan amount in AUD, annual interest rate (Commonwealth Bank's current rates), and loan term in months (typically 12-84 months for personal loans).
Q1: What is Commonwealth Bank's current personal loan rate?
A: Rates vary (typically 6.99%-19.99% p.a. as of 2024) depending on credit score, loan amount, and term. Check their website for current rates.
Q2: Are there any additional fees?
A: Commonwealth Bank may charge an establishment fee (typically $150-$250) and monthly service fees. These aren't included in this calculation.
Q3: Can I make extra repayments?
A: Commonwealth Bank personal loans typically allow extra repayments without penalty, which can reduce total interest paid.
Q4: 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.
Q5: Is this calculator accurate for all loan types?
A: This is for fixed-rate, fixed-term personal loans. It doesn't apply to credit cards, lines of credit, or variable-rate loans.