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's based on the principal amount, interest rate, and loan term.

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 (term in years × 12)
• \( PMT \) — Monthly payment amount (AUD)

Explanation: The formula calculates the fixed payment needed to fully amortize the loan over its term, accounting for both principal and interest.

3. Importance of Loan Payment Calculation

Details: Calculating loan payments helps borrowers understand their financial commitments, compare loan options, and budget effectively for repayments.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What's included in the monthly payment?
A: The payment includes both principal and interest components, calculated to fully repay the loan by the end of the term.

Q2: How does loan term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms have higher payments but lower total interest.

Q3: Are NAB's personal loan rates fixed or variable?
A: NAB offers both fixed and variable rate personal loans. This calculator assumes a fixed rate for the loan term.

Q4: What other costs should I consider?
A: Some loans may have establishment fees, monthly service fees, or early repayment fees not included in this calculation.

Q5: How accurate is this calculator?
A: This provides an estimate. Actual loan terms and payments may vary based on your credit assessment and NAB's current offerings.