Terms for Loans -
Do you want to borrow money in the near future? If so, knowing the following Loan Terminology will make the whole process a lot easier. We've put together a list of some of the most common terms you'll run into when you're trying to get a loan.
Principal is the amount of money you have borrowed.
Interest is the money, or, to put it more simply, the rent, that you have to pay for the money you borrow.
Borrower: The person who gets the loan. This is you.
Interest Rate: This is the cost of borrowing money, expressed as a percentage of the loan amount. In addition to the principal, you have to pay back a fee that keeps coming up. In a promissory note, the interest rate is always written down.
Maximum time to pay back the loan: Your promissory note will tell you how long you have to pay back the whole loan. Pay close attention to the promissory note.
Interest that hasn't been paid is called "accumulated interest."
Adjustable-Rate Mortgage (ARM): A loan with an interest rate that changes over time based on how the index moves.
Adjustment Period: The amount of time that goes by between changes in the interest rate on an ARM. The interest rate on a loan with a one-year adjustment period can change once a year. This type of loan is called a one-year ARM.
Amortization is when you pay back a loan in equal payments of principal and interest instead of just interest.
Co-Signer: A second person who signs the contract and agrees to be responsible for the debt.
Lien The right to get money from a piece of property to pay off a debt or obligation.
These are some of the most important terms that can help you. Check out www.businessproguide.com to learn a lot more about the different kinds of business loans.
