The same formula behind every fixed-rate mortgage or auto loan quote: the fixed amount that, paid every month, exactly clears both principal and all interest by the end of the term. A shorter term or lower rate both cut total interest, but a shorter term raises the monthly payment — the two trade off against each other.

🇵🇹 Portuguese loan disclosures distinguish TAN (the plain interest rate used in this formula) from TAEG (Taxa Anual Efetiva Global), which also folds in fees and mandatory insurance — TAEG is always higher and is the figure the law requires banks to highlight for comparing offers. Most Portuguese home loans are also variable-rate, indexed to Euribor plus a spread, so this exact payment can change at each periodic review.