The process of gradually paying off a loan over time. When a borrower makes regular payments towards their loan, one part of the payment is intended to cover the principal amount of the loan, while the other part is intended to pay the accrued interest. As time goes by, the proportion of the payment going towards the principal increases, while the proportion going towards interest decreases. Amortisation is crucial in order to pay off the loan in full within the agreed timeframe. It is a key process in credit management and helps borrowers build equity as they reduce the loan balance.
Measure representing the amount of interest accrued on a loan or investment from the last interest payment date to the present. This amount reflects interest that has been accrued but not yet paid or capitalised.
Interest that is calculated and paid in advance, i.e. before the utilisation period of the loan or the investment period. In general, the total amount of interest is calculated at the start of the loan and is paid together with the principal amount when the loan is granted.
A legal measure involving the seizure of a debtor's property or assets as security or payment of a debt. This measure is often applied by courts or creditors when a debtor fails to fulfil their payment duties, such as in the case of an unpaid loan, credit card debt or unfulfilled financial obligations.
It is a financial measure that expresses the total annual cost of a loan or credit, including interest, fees and expenses that a borrower may incur over the term of the loan. The APR is expressed as an annual percentage, offering borrowers a way to compare the total cost of different loan or credit options, helping them to make informed decisions about choosing financial products.