Monthly payments are calculated using the formula:
Payment = [P × R × (1+R)^N] / [(1+R)^N-1]
Where:
- P = Principal loan amount
- R = Monthly interest rate (annual rate divided by 12)
- N = Loan tenure in months
Key differences in US personal loans:
- APR (Annual Percentage Rate) includes all fees, giving true cost comparison
- Origination fees (1-8% of loan amount) are common
- Credit score significantly impacts your interest rate
- Typical loan terms range from 1-7 years
- Prepayment penalties are rare but check your loan terms