Basics: Loan

January 23rd, 2010 by carla_guillermo

First and foremost, the word loan is part of the jargon when it comes to financial concerns. But if you are just learning the basics, loan is simply defined as a way to get what you want when you don’t have what it takes. Loan revolves on money, agreement, payment terms and ownership.

For an example, if you want a car and you don’t have enough money, you can apply for an auto loan to have one. But it is not that simple, you have to agree with the terms that come with it. You and the lender would talk about the interests, when and how to pay the money at regular intervals for a period of time. The good thing with loan is that, after everything was settled you can now drive your own car.

But you might ask on how much does a loan would cost. You need good mathematics or calculator with this one. First, know your monthly payment and the number of payments you need to complete the agreement. Next is that you multiply the two numbers to get the cost. If you got approved for a loan of $20,000 for 60 months but agreed to give $356 every month, the total cost after that period would be $21,360. The excess $1,360 would just be allocated for the interest. These would be in simple terms because if the case would be a little bit complicated with trading, cash down, etc. you need to do specific calculations.

Tags: autoloan, car loan, loan, loan basics
Posted in Money Matters