Personal Loan Types
There are various types of personal loan types based on how the principal and interest will be paid. The calculator here supported the three major loan types:
- Amortized Loan is a loan like your mortgage loan. The principal payment will spread out the whole life of the loan along with interest. Each payment will contain part of Principal and part of Interest.
The sum of the principal and interest in each period is equal. Therefore, sometimes this kind of loan has another name of Level P&I. Where P means principal and I means interest. Level means the sum of P and I is equal each period.
Mortgage loan, auto loan and other assets backed loan are normally issued as amortized loan.
- Bullet Loan is widely used as corporate bonds that pay the principal at the maturity date and interest in each payment period. The bullet is named as the total principal is paid at a single point like a bullet.
- At Maturity Loan is a compounding interest loan. The interest compounds based on a predefined frequency and accumulates into the final balance that will be paid back at maturity date. So there is only one single payment that happens at the maturity date of the loan.