Why Loan Terms Matter
Knowing the fundamental loan term will make you a smarter borrower, and will enable you to bypass surprises, avoid unnecessary financial pains when repaying loans.
Principal Amount
The principal is the sum that you borrow initially, interest, and other fees being charged afterwards.
Interest Rate
Interest rate is the percentage which is put on your loan that decides how much additional you will pay in the course of time.
EMI Explained
EMI or Equated Monthly Instalment is the fixed payment on a monthly basis which includes both the principal and interest component.
Loan Tenure
Repayment duration is known as loan tenure. Long tenure reduces the EMIs but overall the interest paid rises.
Processing Fees
Processing fees are a single fee that lenders impose to process, grant and disburse your loan application.
Prepayment and Foreclosure
Prepayment refers to advance payments in installments; foreclosure refers to the closure of the loan until tenure expiry.
The Total Cost of Borrowing
Add up the interest, fees and the repaying value and never take into account the monthly EMI alone.
Disclaimer: The information provided on this website is for general informational purposes only and should not be considered financial or legal advice. Please consult with a qualified financial advisor before making any decisions.
