Estimate the monthly instalment and the interest you pay when a premium funder spreads your business insurance premium.
Business insurance in Australia is often paid by premium funding: a finance company pays the insurer the full annual premium and you repay it in instalments, commonly over 10 or 12 months. It is a separate credit contract, usually arranged through your broker, and the funder can usually cancel the policy if you stop paying.
How to use it. Enter the amount being funded (the total premium including GST and stamp duty, minus any deposit), the interest rate and the term. For 10 monthly instalments enter 0.83 years; for 12 enter 1. Put any deposit and establishment fee in the upfront box so the total includes them.
Formula. The instalment uses the standard reducing-balance formula: payment = P x r / (1 - (1 + r)^-n), where P is the amount funded, r is the yearly rate divided by 12 and n is the number of months.
Worked example (illustrative). $5,200 funded at 12% a year over 10 months gives an instalment of about $549.03. Ten instalments total about $5,490.27, so the interest is about $290.27. Adding a $50 establishment fee, you pay about $5,540.27 against $5,200 upfront.
Flat rates. Many funding contracts quote a flat rate, charged on the whole amount for the whole term. Flat interest = amount x flat rate x months / 12, so 6% flat on $5,200 over 10 months is $260. Because the balance falls each month, a flat rate costs noticeably more than the same number quoted as a reducing-balance rate, so this calculator understates a flat-rate contract unless you convert it. Always compare the total amount payable in the funding contract itself.
Worked Quotes and Checklists
How premium funding works for Australian business insurance, flat versus reducing rates, worked cost examples, cancellation and default risks, and alternatives.
