A loan can be a boon to those who need financial help and availing a loan automatically implies that it should be repaid along with the decided interest rate. Read to know what loan repayment is and how it works.
Returning the loan amount borrowed to the lender is known as loan repayment. But first, let us take a look at what loans are.
A loan refers to a sum of money that is lent by banks, NBFCs or other lenders to a borrower with the intention of receiving it back with interest over a period of time. Loans can be secured or unsecured. Secured loans are those that require a collateral or security in order to be disbursed. For example, if you wish to avail a home loan, the house in question will be in the lender’s name until the loan has been fully repaid.
Unsecured loans are those that do not require collateral or security for disbursal such as personal loans.
The act or process of repaying the borrowed amount to the lender is known as loan repayment. When a lender provides a loan to a customer there is inherent risk involved. In order to mitigate this risk, an interest rate is imposed on the loan. The customer will have to pay back the loan in installments known as EMIs or Equated Monthly Installments. EMI consists of a portion of the principal amount that is borrowed along with interest amount.
Basically, EMI = Principal Amount + Interest Amount
It is interesting to note that the principal amount and interest amount are not equal in an EMI, in fact during the initial loan repayment period, the interest amount will be higher and will reduce as the repayment term progresses and the principal amount increases. Additionally, the EMI amount can also be fixed or floating. Fixed EMI payments are when the amount to be paid does not vary during the loan repayment term. When it comes to floating (also known as variable or flexible repayment) options, the EMI amount may vary depending on the market value and other fluctuations.
Loan Amount
Min ₹10
Max ₹10,000,000
Rate of Interest
Min 5%
Max 25%
Loan Tenure
Min 3 months
Max 72 months
Availability of a loan is an act of responsibility as it is understood that the amount will have to be repaid. There are a number of loans available in the market today with differing terms and conditions. Customers will have to choose a loan that suits their requirements and ensure that the loan repayment is done on time. If you are looking for a personal loan at competitive rates and advantageous terms and conditions, visit the Moneyview website or download the digital lending app to apply today.
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Returning money that you have borrowed from a lender is known as repayment. You must make regular monthly payments for a set period of time in order to repay a loan. These periodic payments contain both principal and interest.
There are different types of loan repayment methods. They are
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Disclaimer
The starting interest rate depends on factors such as credit history, financial obligations, specific lender's criteria and Terms and conditions. Moneyview is a digital lending platform; all loans are evaluated and disbursed by our lending partners, who are registered as Non-Banking Financial Companies or Banks with the Reserve Bank of India.
This article is for informational purposes only and does not constitute financial or legal advice. Always consult with your financial advisor for specific guidance.
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