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. It accounts for the principal amount, monthly interest rate, and loan duration.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

• \( P \) — Principal loan amount (AUD)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Number of monthly payments
• \( PMT \) — Monthly payment amount (AUD)

Explanation: The formula calculates the fixed payment needed each month to pay off the loan with interest over the specified term.

3. Importance of Loan Payment Calculation

Details: Accurate payment calculation helps borrowers understand their financial commitments, compare loan offers, and budget effectively for repayments.

4. Using the Calculator

Tips: Enter the loan amount in AUD, monthly interest rate as a decimal (e.g., 0.01 for 1%), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert annual rate to monthly rate?
A: Divide the annual percentage rate (APR) by 12 (months) and by 100 (to convert to decimal). For example, 12% APR = 0.12/12 = 0.01 monthly rate.

Q2: Are Australian loan payments calculated differently?
A: The basic formula is universal, but Australian lenders may include additional fees or use slightly different compounding methods.

Q3: What's a typical loan term in Australia?
A: Personal loans typically range from 1-7 years (12-84 months), with 3-5 years being most common.

Q4: Does this include loan fees?
A: No, this calculates principal and interest only. Australian loans often have establishment fees which should be considered separately.

Q5: How accurate is this calculator?
A: It provides the exact mathematical payment amount, but actual loan offers may vary slightly due to rounding or specific lender policies.