How To Make Your Loan Payment?

In business, a loan is basically the lending of currency by one or more persons, companies, institutions or other entities to others, companies etc. The recipient is liable to repay the total principal amount borrowed and is generally liable to make interest on that principal amount till it is paid. Lenders who provide these loans are known as issuers or creditors. An important distinction between a loan and a charge is that the loan has a specific purpose whereas a charge merely acquires a legal title to something. The two are very different in many ways.

A loan can be short term or long term, i.e. either for a day, week or month and may be repaid in installments. Repayment schedules are specified and the borrower pays only the interest on the loan principal amount plus interest. Repayment may be in lump sum or over a period of months or years.

If you borrow an amount of money for a week and if you repay only the interest part and do not repay the full amount, then you have actually borrowed a month’s salary. Similarly, if you would owe money but you repay only the interest part, then you would owe x number of weeks. The repayment schedule would not work in all cases. It works best in cases where the repayment is done monthly. In such cases, the loan amount is adjusted so that the amount which is due every month is less than the total loan principal amount plus interest.

When you buy a property, you need to satisfy the mortgage holder regarding the repayment of the loan. The conditions are somewhat different with different types of assets. For example, if you borrow money for a mobile phone, then the repayments have to be made according to the installment principle. It means that the loan amount plus interest would be equal to the value of the mobile phone.

Some people borrow money from credit cards for a certain amount of time, repay it and then renew the credit card loans. In these cases, the interest rates on the credit cards are often very high. Therefore, they are better suited for those who would not want to have their name in such records.

To sum up, the amount which you can borrow depends on several factors. First, you have to consider your personal needs. You can borrow a small amount to cater for minor household expenses. If you are looking for bigger loans, then you can choose to borrow a larger amount. Hence, you will have to decide how much would you want to spend on personal loans.