1. What is the CBA Loan Repayment Formula?

The CBA (Commonwealth Bank Australia) loan repayment formula calculates the fixed monthly payment required to repay a loan over a specified term, including interest. It's based on standard amortization calculations used by Australian banks.

2. How Does the Calculator Work?

The calculator uses the loan repayment formula:

Where:

• \( PMT \) — Monthly payment (AUD)
• \( PV \) — Principal loan amount (AUD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (term in years × 12)

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

3. Importance of Loan Repayment Calculation

Details: Understanding your loan repayments helps with budgeting, comparing loan options, and assessing affordability before committing to a loan.

4. Using the Calculator

Tips: Enter the loan 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 CBA's fees and charges?
A: No, this calculates principal and interest only. CBA may charge additional fees not included in this calculation.

Q2: How accurate is this calculator?
A: It provides standard principal+interest repayment amounts. Actual payments may vary slightly due to rounding or specific bank policies.

Q3: Can I calculate fortnightly or weekly payments?
A: For fortnightly payments, divide the monthly amount by 2. For weekly, divide by 4.33.

Q4: What's the difference between principal and interest?
A: Principal is the original loan amount, interest is the cost of borrowing. Early payments are mostly interest.

Q5: How can I reduce my total interest paid?
A: Make extra repayments, choose a shorter term, or negotiate a lower interest rate.