1. What is the Loan Repayment Formula?

The loan repayment formula calculates the fixed monthly payment required to repay a loan over a specified term, including interest. It's the standard formula used by Australian lenders 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 (loan term in years × 12)
• \( PMT \) — Monthly payment amount (AUD)

Explanation: The formula accounts for compound interest and spreads payments evenly over the loan term.

3. Importance of Loan Repayment Calculation

Details: Understanding your monthly repayment helps with budgeting and comparing different loan options. It shows the true cost of borrowing.

4. Using the Calculator

Tips: Enter the loan amount in AUD, annual interest rate (without % sign), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this calculator include loan fees?
A: No, this calculates principal and interest only. Australian loans often have establishment fees which aren't included here.

Q2: Are Australian personal loans typically fixed or variable?
A: Most Australian personal loans have fixed interest rates, meaning your repayment amount stays the same.

Q3: What's a typical personal loan term in Australia?
A: Terms usually range from 1-7 years, with 3-5 years being most common for medium-sized loans.

Q4: Can I make extra repayments?
A: Many Australian lenders allow extra repayments, but some charge fees. Check with your specific lender.

Q5: How does credit score affect my rate?
A: In Australia, better credit scores typically qualify for lower interest rates, potentially saving thousands over the loan term.