Hello. When we face a situation where we need an urgent lump sum of money in our lives, we use a loan. The bank sells various products and loans. From the perspective of getting a loan for the first time, there are many terms you don’t know, and you often don’t feel the difference in the repayment method. So today, we’re going to learn about the types of loan repayment methods and the advantages and disadvantages of each loan.
What is a loan? What is a loan?
First of all, it’s really simple, but I’ll explain what a loan is. A loan means borrowing money. Naturally, financial institutions are talking about funds borrowed from financial institutions, but there is a difference in where to borrow them, whether they are loans in terms of where to borrow them.
Nowadays, there are new loans in the form of multiple creditors lending money to a large number of debtors because it is called P2P loans. The details are as below.
1 loan in 1 financial sector 1 loan in 1 financial sector
All loans we usually receive from commercial banks correspond to loans from the first financial sector. It has the advantage of having a lower interest rate than other loans. In addition to external credit ratings, the party’s internal audit standards are applied, which has the advantage of being difficult and complicated in the screening process. Instead, there is less negative impact on credit ratings after taking out a loan.
Two-tier loans Two-tier loans
Capital, savings banks, credit card companies, and insurance companies will be included in the second-tier loans. There are also many low-credit loans or unemployed loan products for unemployed people, freelancers, students, housewives, etc., so the financial underprivileged who cannot get loans from the first financial sector are flocking to the second financial sector. Although most of the loans are available due to the relatively smooth approval process, they have the disadvantage of having high interest rates and easy credit ratings once used.
This is a loan you receive on the Internet without visiting the sales store. The funds of several investors who want to lend money are collected and delivered to debtors. As it is done over the Internet, the process from application to execution is very easy, and since it is operated without a branch, there is no burden on labor costs or seat taxes, and interest rates are cheaper than 2 financial loans. This can be said to have resolved to some extent the situation in which users who were 폰테크 not able to use the existing 1 financial sector were forced to pay high-interest debt.
Loan repayment method Loan repayment method
Now, let’s talk about how to repay your loan.
- Repayment of principal equal
The principal equal repayment is a method of repaying the principal equally every month after the loan is executed, and interest is paid by applying the remaining principal as much as the remaining principal. This has the advantage of decreasing repayment as the loan period passes, but it is inconvenient to make a fund plan because the interest price that you have to pay every month changes.
- Equivalent repayment of principal and interest
Equal repayment of principal and interest is a method of dividing the principal and interest by the period of use of the loan and paying the same amount every month. It has the advantage of spending the same amount every month, so you can manage your money efficiently, but because of the high interest burden, it is used when you borrow relatively less money, such as emergency loans or small loans, rather than large amounts such as real estate loans.
- Repayment due date and time
In the case of lump-sum repayment of maturity, it is a loan repayment method that pays only the interest as much as the agreed interest rate while using the loan, and pays all remaining loans when the maturity date arrives. Since there is no interest burden while using it, it can be an advantage for those who plan to spend a lot of money later, but if not, it is a high-risk method because there is a high risk to bear.
- Repayment without payment
I’m sure you’ve seen a lot of words like a year’s or two’s worth of loans. In the case of fixed repayment, it means that only interest as much as the agreed interest rate is repaid during the fixed period, and at the end of the period, the principal and interest are equal, and the date and time of maturity.