Description

Assumptions

• It does not take into account any possible fees i.e. up-front fees or ongoing fees.
• Interest rate does not change over the loan term.
• Interest is calculated by compounding on the same repayment frequency selected, i.e. weekly, fortnightly, monthly. In practice, interest compounding frequency may not be the same as repayment frequency.
• It is assumed that a year consists 26 fortnights or 52 weeks which is counted as 364 days rather than 365 or 366 days.
• No rounding is done throughout calculation whereas repayments are rounded to at least the nearer cent in practice.
• The final repayment after the increase in repayment amount will be a partial repayment as required to reduce the loan balance to zero without negative owing amount.