After paying several thousands of dollars on the root canals on my upper teeth, my dentist told me that they had to be pulled. He told me that the dentist that did the work didn't do it properly and that all of the teeth were infected. After I collected myself, we started discussing the cost of the extraction procedure and the cost of the dentures. I knew I couldn't pay for all of that out of my pocket and he explained the dangers of allowing dental infections to fester. I quickly learned about financing dental procedures. If you are in a similar situation, go to my site to learn about your options of financing dental work.
Do you need to borrow some cash from a local lender and are considering an installment loan to do it? You will definitely want to familiarize yourself with the following terminology so that you can understand the type of loan you are getting.
Principal
The principal is the technical way of saying the amount of money that you borrow from the lender. You'll see it when referring to the principal balance of the loan, which is how much money is left to be repaid until the debt is paid off. It is also used when describing how the loan payment is made up, as it is a percentage of interest and principal.
Amortization Schedule
One way that your lender makes money on an installment loan is by charging you interest. However, the interest rate equals the amount of interest that you pay each month on average over the length of the entire loan. Your monthly payments will be made up of a larger percentage being interest at the beginning, and a larger percentage being principal at the end.
Thankfully, the breakdown of what makes up each payment is not a mystery. You will be provided with an amortization schedule, which shows how each monthly payment breaks down into principal and interest payments. This can let you know how much of the principal will be paid off by a specific date in the future.
Prepayment Penalty
There are various fees that are charged as part of an installment loan, including things as simple as late fees for missing your payment due date. However, you may not be aware that some lenders charge a prepayment penalty. Since the lender is hoping to receive all the interest payments as part of the loan, they may charge a prepayment penalty if you decide to make additional principal payments and pay off the loan early. While some lenders will not charge a prepayment penalty, others may charge you for getting rid of your debt early.
Term
The term of the loan is how long you will have to pay back the borrowed money. This is referred to in years or months, which really depends on how long the loan is. Short-term loans are often described in months, while long-term loans are described in years.
Have questions about the terminology related to your installment loan? Reach out to a local installment loan service for more information.
Share19 April 2023
