What is a loan?
Definition of loan and different forms.
A loan is a contractual contract in which money or a justifiable matter (property loan) is transferred for temporary use. It is typically a one-off payment, which is repaid through regular repayment. The word loan is derived from the term “loan”, which means “borrow”. There is, however, a difference between a loan and a loan, since borrowing is a free activity, while the loan can be provided for a fee as well as free of charge. In addition, the loan is actually a subform of the term credit. The term loan is used primarily for medium and long-term loans. In everyday language, however, the term is often used as a synonym.
Different forms of the loan
There are different ways to design a loan. We will briefly introduce you to the most important forms:
In finance, an annuity is a periodic payment made up of the elements repayment and interest. The annual repayment amount is usually always the same. As a result, the portion of the repayment that increases and the interest portion decreases during the term increases. The repayment of an annuity loan is easy to plan, as the rates are always the same during repayment.
As the name implies, this loan is repaid at the end of the term in one blow. The opposite of the bullet loan is the repayment loan.
A forward loan is an annuity loan with a special feature. Upon conclusion, the terms are agreed, but a payment will be made later. Thus, for example, a certain interest rate can be secured to replace a loan that expires in one year. The granting of the forward loan usually involves costs that must be taken into account.
Maturity rate loans
The interest amount that accrues over the entire term is added to the loan at the beginning. Subsequently, during the eradication a constant amount is repaid.
The lender receives (in addition to accruing interest) a profit sharing that is individually defined.
In this case, no money, but a reasonable cause is left to the borrower. What lies behind the term justifiable matter is to be defined in the contract and a legal matter of interpretation.
The portion of the repayment remains constant during the term. The interest is calculated on the basis of the remaining debt always new. Thus, the debt service decreases during the term.