Loan Terminology
Below is a MRR and PLR article in category Finance -> subcategory Loans.
Understanding Loan Terminology
Are you considering taking out a loan soon? Being familiar with some key loan terminology can make the process much smoother. Below are some essential terms you'll encounter when applying for a loan:
- Principal: The amount of money you borrow.
- Interest: The cost of borrowing the money, similar to rent for using the funds.
- Borrower: That's you?"the individual receiving the loan.
- Interest Rate: The percentage charged on the loan. It's a recurring fee in addition to the principal and is stated in the promissory note.
- Maximum Repayment Time: The longest period allowed to repay the loan, as specified in the promissory note. Be sure to read this note carefully.
- Accumulated Interest: Any unpaid, overdue interest.
- Adjustable Rate Mortgage (ARM): A loan with an interest rate that varies over time based on an index.
- Adjustment Period: The interval between interest rate changes on an ARM. For example, a one-year ARM means the rate can change annually.
- Amortization: Paying off a loan with regular installments covering both principal and interest, as opposed to interest-only payments.
- Co-Signer: Another individual who signs the loan contract, sharing responsibility for the debt.
- Lien: A legal claim on property as security for a debt or obligation.
Understanding these basic terms will give you a head start. For more detailed information on various types of business loans, visit [BusinessProGuide](http://www.businessproguide.com).
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