1. What is the Personal Loan Repayment Formula?

The Personal Loan Repayment Formula calculates the fixed monthly payment required to repay a loan over a specified term. This is the standard formula used by Australian lenders for personal loans.

2. How Does the Calculator Work?

The calculator uses the PMT formula:

Where:

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

Explanation: The formula calculates the fixed payment needed each month to pay off the loan, including both principal and interest components.

3. Importance of Loan Repayment Calculation

Details: Understanding your monthly repayment helps with budgeting and ensures you can comfortably afford the loan before committing. It also allows comparison between different loan offers.

4. Using the Calculator

Tips: Enter the loan amount in AUD, annual interest rate (without % sign), and loan term in years. The calculator will show your monthly payment, total repayment, and total interest.

5. Frequently Asked Questions (FAQ)

Q1: Does this include loan fees?
A: No, this calculation doesn't include establishment fees or other loan charges which may apply in Australia.

Q2: Are Australian personal loans typically fixed or variable?
A: Most personal loans in Australia are fixed-rate loans with set repayments, which this calculator is designed for.

Q3: How accurate is this calculator?
A: It provides a good estimate, but your actual repayments may vary slightly due to rounding by lenders.

Q4: What's a typical personal loan term in Australia?
A: Terms usually range from 1 to 7 years, with 3-5 years being most common for personal loans.

Q5: Can I use this for car loans or mortgages?
A: While the formula is similar, specialized calculators exist for those loan types which may include different features.