How the monthly payment is calculated
On a Privanza personal loan the Principal is not repaid month by month: it is settled at the end, on the cancellation date set in the contract. What you pay each month is the Current Interest.
What you pay each month
For the life of the contract the Borrower pays, monthly, the Current Interest instalments — commonly called «Cuotas».
The Principal is not due until the cancellation date set in the contract.
The two figures that set the Cuota
| Item | How it is determined |
|---|---|
| Loan Balance | Taken as of the day the payment falls due. It may be the original loan, or less if partial amortizations or payments against the Principal have been made. |
| Current Interest | As stated in the contract: 14.0% per year. |
The calculation
- Annual Instalment = Loan Balance × Current Interest.
- Monthly Payment = Annual Instalment ÷ 12 months.
An example
- Annual Instalment = $100,000.00 × 14.0% = $14,000.00
- Monthly Payment = $14,000.00 ÷ 12 = $1,166.67
Why this matters
The payment is lower than on a bank loan of the same size, because it carries no principal amortization. In exchange the Principal stands in full until maturity, so your way out — selling the asset, the income that repays it, or refinancing — has to be clear from day one.
If you make payments against the Principal, later Cuotas fall, because the amount they are calculated on is smaller.