American method loan
The amortization by the American method is characterized by the payment of only interests during the loan period, the whole capital is paid at the end of the loan.
American method loan
Amortization system through single repayment of capital and periodic payment of interest
It is a real contract as the payment is an essential element for the contract to exist and, from that moment, obligations for the borrower are generated. Some of these obligations are:
• Paying all the formalization costs.
• Paying the fees for the operation.
• Making the capital amortizations within the agreed periods.
• Paying the interests within the agreed periods, as well as the interests on arrears that can be generated by late payments.
In the American amortization system or system by single amortization and periodic payment of interests, the instalments are calculated as follows:
Being:
a: instalment of the period
Co: amount of the loan
n: number of periods
i: interest rate.