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How personal loan interest is calculated?

Interest rate is the amount that you pay to the lender every year on the outstanding loan amount. This interest rate sets by the central bank. However, market conditions also influence the on-going interest rates for different products.

Other technical factors relating to the loan that impact the interest rate you are offered include:

  • Principal Amount
  • Loan term
  • Repayment Schedule

The basic formula:

Interest = Loan Principal*Interest Rate

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