business and consumer loans

Business Loan

Money spent specifically for a business purpose, used to start or expand a business.

Consumer Loan

Money lent to an individual for personal or family purposes.

Collateral

Assets used to secure a loan, which may include real estate or other investments.

Chattel Mortgage

A mortgage on movable property.

Amortization Method

A way of paying a loan (principal and interest) in equal installments at regular intervals.

Outstanding Balance

The amount remaining on a loan that is owed at a specific time.

Term of the Loan

The time allotted to pay off the entire loan.

Difference between Business and Consumer Loans

Business loans are for enterprise purposes, while consumer loans are for personal or family use.

Guarantor

An individual who is responsible for repaying a loan if the primary borrower cannot.

Down Payment

An initial payment made when something is bought on credit.

Total Interest

The overall cost of borrowing money, calculated as the total amount paid back minus the principal.

Future Value Formula

The formula used to calculate the amount to be paid in the future, expressed as P(1+j)^n.

Monthly Payment Calculation

Determining the amount due each month on a loan, often involving complex formulas.

Present Value Method (Prospective Method)

A method used to compute the outstanding balance by calculating the present value of all remaining payments.