1. What is the Personal Loan Repayment Formula?

The personal loan repayment formula calculates the fixed monthly payment (PMT) required to repay a loan over a specified term. This formula is used by CommBank and other financial institutions to determine loan repayments.

2. How Does the Calculator Work?

The calculator uses the standard loan repayment formula:

Where:

• \( P \) — Principal loan amount (AUD)
• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Number of monthly payments (loan term in months)
• \( PMT \) — Fixed monthly payment amount (AUD)

Explanation: The formula accounts for both principal and interest payments over the life of the loan, with payments remaining constant while the proportion going to principal increases over time.

3. Importance of Loan Repayment Calculation

Details: Understanding your monthly repayment helps with budgeting and ensures the loan is affordable. It also allows comparison between different loan options.

4. Using the Calculator

Tips: Enter the loan amount in AUD, annual interest rate as a percentage (e.g., 7.5 for 7.5%), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include CommBank's fees?
A: This calculates principal and interest only. Additional fees may apply - check with CommBank for exact costs.

Q2: How accurate is this calculator?
A: It provides standard repayment calculations. Actual repayments may vary slightly due to rounding or specific loan terms.

Q3: Can I calculate repayments for different payment frequencies?
A: This calculator assumes monthly payments. For weekly/fortnightly payments, adjust the rate and term accordingly.

Q4: What's the difference between fixed and variable rate loans?
A: Fixed rates stay constant during the term, while variable rates may change. This calculator assumes a fixed rate.

Q5: How can I reduce my total interest paid?
A: Consider a shorter loan term or making additional repayments when possible to reduce total interest costs.