Loan basics

Understand the numbers and terms behind a loan.

31 GUIDES / PAGE 1 OF 3

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Principal, interest and the amount you actually repay

Follow a $6,000 example from borrowed principal to monthly payments, interest and fees, and see why the cash you receive can differ from what you owe.

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Loan basics

APR and interest rate: why both numbers matter

Use APR, the contract rate and actual cash received to compare loan offers without mixing different measures.

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Loan basics

How a fixed-rate installment loan works

Follow a fixed-rate installment loan from funding through each payment and understand what can still change.

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Loan basics

What changes when a loan has a variable rate

Read the index, margin, adjustment dates and limits before budgeting for a variable-rate loan.

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Loan basics

Secured and unsecured loans: what is at stake

Compare the specific property risk of a secured loan with the repayment obligations of unsecured borrowing.

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Loan basics

Loan term versus payment due date

Keep a loan term, maturity date and recurring payment deadline separate when creating your repayment calendar.

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Loan basics

Simple interest and compound interest explained

Understand the balance used for interest, the role of capitalization and why daily interest is not automatically daily compounding.

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Loan basics

Why early payments contain more interest

See why the interest share usually falls as an amortizing loan balance declines, using two clear payment rows.

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Loan basics

Reading an amortization schedule one row at a time

Read payment, interest, principal and balance columns together, then use an amortization schedule to check your own loan.

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Loan basics

An origination fee can change the cash you receive

Calculate net proceeds when an origination fee is withheld and avoid borrowing less usable cash than the expense requires.

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Loan basics

The difference between a loan and a line of credit

Compare a one-time loan advance with drawing from a credit line as expenses arise.

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Loan basics

What a balloon payment means for your budget

Plan for a large final loan payment by checking the amount, date and realistic source of funds.

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