1. What is the Loan Payment Formula?

The loan payment formula calculates the fixed monthly payment required to fully repay a loan over its term, including both principal and interest components. This is the standard formula used by Westpac Bank and most financial institutions.

2. How Does the Calculator Work?

The calculator uses the standard 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, ensuring each payment covers both interest and principal reduction.

3. Importance of Loan Payment Calculation

Details: Understanding your monthly payment 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 principal amount in AUD, annual interest rate as a percentage (e.g., 5.25 for 5.25%), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include Westpac's fees?
A: No, this calculates principal and interest only. Westpac's loan fees would be additional.

Q2: How does changing the term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms increase payments but reduce total interest.

Q3: What's a typical Westpac interest rate?
A: Rates vary by loan type and market conditions. Check Westpac's current rates for accurate information.

Q4: Can I calculate fortnightly payments?
A: For fortnightly payments, divide the monthly amount by 2 and adjust the term to fortnightly periods.

Q5: How accurate is this calculator?
A: It provides standard calculations, but actual Westpac loan terms may vary based on credit assessment and product features.