1. What is the Westpac Loan Payment Formula?

The Westpac loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term, including interest. This is the standard formula used for personal loans.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

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

Explanation: The formula accounts for compound interest over the life of the loan, calculating a fixed payment that covers both principal and interest.

3. Importance of Loan Payment Calculation

Details: Understanding your monthly payment helps with budgeting and ensures you can comfortably afford the loan. It also shows the total cost of borrowing.

4. Using the Calculator

Tips: Enter the principal 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 Westpac Sri Lanka?
A: While it uses Westpac's standard loan calculation method, it's not specific to any particular country or branch.

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

Q3: What's the difference between interest rate and APR?
A: APR includes fees and other loan costs, while the interest rate is just the cost of borrowing the principal.

Q4: Can I use this for other types of loans?
A: This works for any fixed-rate, fixed-term loan, including auto loans and mortgages.

Q5: How can I reduce my total interest paid?
A: You can pay less interest by choosing a shorter loan term or making additional principal payments.