1. What is the Loan Payment Formula?

The loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term, including both principal and interest. This is the standard formula used by Westpac for home, personal, and car 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 will completely pay off the loan by the end of the term.

3. Importance of Loan Repayment Calculation

Details: Understanding your monthly repayment helps with budgeting and financial planning. It allows you to compare different loan options and choose terms that fit your financial situation.

4. Using the Calculator

Tips: Enter the principal amount in AUD, annual interest rate as a percentage (e.g., 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 and charges?
A: This calculation only includes principal and interest. Additional fees may apply depending on the loan product.

Q2: How does making extra repayments affect my loan?
A: Extra repayments reduce your principal faster, potentially saving interest and shortening your loan term.

Q3: What's the difference between fixed and variable rate loans?
A: Fixed rates stay the same for a set period, while variable rates can change. This calculator assumes a constant rate.

Q4: Can I calculate part-time repayments?
A: This calculator assumes monthly payments. For fortnightly or weekly payments, divide the monthly amount appropriately.

Q5: How accurate is this calculator?
A: This provides an estimate. For exact figures, consult with Westpac as actual terms may vary based on your circumstances.