A repayment is known as paying back the loan amount that is previously borrowed. The repayment is generally accomplished with regular payments, which includes part of principal and interest. If the user fails to repay the debt then an individual is declared as bankruptcy and that will have the negative effect on the credit rating of the individual. The borrower should check for an alternative before declaring bankruptcy because if done so the borrower may not be able to get the finance in the future. They are some alternatives to bankruptcy like earning additional income, refinancing and negotiating with the finance company. The specific loan contract has the option to reveal alternatives to the borrowers who are unable to repay the loans.
The borrower has many options to avoid foreclosure due to delinquent mortgage repayment. The borrower may apply for refinancing to a fixed-rate mortgage with the lower interest rate if the borrower has the adjustable-rate mortgage. If the payment problem is temporary then the borrower can pay the due amount with the late fee and penalties. There are also other options for repaying the mortgage loan.
In the student loan repayment, the borrowers are allowed to lower payment amount, postponed payment, and loan forgiveness in some cases. This repayment flexibility is provided to the borrower whose life changes. It is especially helpful for the borrower with a health crisis or a financial crisis. The other repayment options are standard payments, extended and graduated payment plans and income-driven plans.
Credit card repayments:
The user must stop using the credit card as the debt increase the interest on the outstanding balance also increases. The user has to set a fixed amount to pay off the debt. The repayment of credit card is more flexible as the amount can vary accordingly on the usage. There is an option of minimum payment due on the credit card to avoid penalty and also other option for repayments.
How to repay loan faster?
- Shorter terms: The shorter loan term will be repaid faster as the reduced length of the loan lowers the interest paid.
- Pay extra: paying extra on the monthly installments lower the principal amount due, which speed up the loan term and reduces the interest amount.
- Biweekly payments: it similar to paying extra. As the payments are made often results in the decrease of interest rate and will lower the principal amount.
- Refinance: It helps to pay off the existing debt will low interest rates by taking the new loan with more favorable terms.
The components included in the repayment calculator:
- Loan amount: The total loan amount.
- Upfront fee: The amount paid as upfront at the beginning of the loan.
- Interest rate: The rate of interest on the loan amount borrowed.
- Compound: The interest compounded like monthly, semi-yearly, yearly etc.
- Payback: Paying back the loan in term of monthly, biweekly, semi-yearly, or yearly etc.
- Fixed loan term: The repayment is made with fixed loan term.
- Fixed installments: The repayment is made in fixed installments.
- Loan term: For the time period the loan is borrowed.
The repayment calculator is used to calculate the repayment amount of fixed loan term or fixed installments with variable loan terms. In this calculator, we can calculate the repayment of mortgage loans, credit card, small business, auto loans, and student loans.