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 is the standard formula used by NAB (National Australia Bank) and other financial institutions for personal loans.

2. How Does the Calculator Work?

The calculator uses the loan repayment formula:

Where:

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

Explanation: The formula calculates the fixed payment needed to pay off the loan over the specified term, accounting for compound interest.

3. Importance of Loan Repayment Calculation

Details: Understanding your monthly repayment helps with budgeting and ensures you can comfortably afford the loan. It also helps compare different loan options.

4. Using the Calculator

Tips: Enter the loan amount in AUD, annual interest rate as a percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is this calculator specific to Malaysia?
A: No, this calculates NAB-style personal loan repayments and is not specific to Malaysia.

Q2: Does this include any fees or charges?
A: No, this calculation only includes principal and interest. Actual loans may have additional fees.

Q3: What's the difference between reducing and flat interest rates?
A: This calculator uses reducing balance (compound interest) which is standard for personal loans.

Q4: Can I use this for other types of loans?
A: This is designed for fixed-rate personal loans. Other loans may use different calculations.

Q5: How accurate is this calculator?
A: It provides a good estimate but actual repayments may vary slightly based on the lender's specific calculation methods.