Loan Terminology –
Are you planning to take some loan in the near future? If yes, then the entire procedure will be fairly simpler if you are aware of the following Loan Terminology. We have picked up some most common terminologies, which you will come across various times while you, are applying for a loan.
Principal – the money that you have borrowed.
Interest – the money or in simpler words the rent that you need to pay for the money that you have borrowed.
Borrower – the person (you) who receives the loan.
Interest Rate – This is a percentage of the loan amount that you’re being charged for borrowing money. It is a re-occurring charge that you need to repay, in addition to the principal. Interest rate is always recorded in the promissory note.
Maximum repayment time – Your promissory note will state the maximum time that the you can take to repay the entire loan. Read the promissory note carefully.
Accumulated Interest – Unpaid, your past due interest.
Adjustable Rate Mortgage (ARM) – A loan with an interest rate that changes over time in line with movements in the index.
Adjustment Period -The time between interest rate changes on an ARM. A loan with an adjustment period of one year is called a one-year ARM, which explains that the interest rate can change once a year.
Amortization – Repayment of a loan in equal installments of principal and interest, rather than interest-only payments.
Co-Signer – A second party who takes responsibility for the debt by signing the contract.
Lien The claim on a piece of property for payment to satisfy a debt or obligation.
These were some of the basic glossary that could help you. More lots more details on various types of business loans, check www.businessproguide.com
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