Most of our customers sometimes ask about how principal and interest works for small business loans. It’s an important question. Many borrowers with longer term financing complain that principal isn’t being paid down fast enough.
This is true of most loans designed to span for 7 or more years. This includes:
To illustrate, let’s look at our Small Business Loans, and compare the amortization to other long term lending products.
Amortization is the practice where the principal of a loan is paid down (amortized) over the life of the loan.
If you were to take out a home mortgage, most early payments go primarily toward interest. Over time, the percentage of your payment that represents principal gradually increases. The interest represented in each payment falls as principal paid rises over time.
In fact, let’s examine a 30-year fixed mortgage. Consider a $200,000 mortgage taken out at a 5% interest rate. Your payment for this mortgage would be $1,073.64 monthly.
An amortization table will show how much is still owed after each payment. More importantly, it will show that for the first several years, very little is paid down:
In fact, while your payment is fixed monthly at $1,073.64, your first mortgage payment will contain $833.33 in interest and $240.31 in principal, and if paid according to schedule, your 12th mortgage payment represents $822.09 going towards interest, and $251.56 going towards principal.
In the example above, after five years, you will have made $64,418.40 in payments. That $64,418.40 in payments, however, will only result in $16,342.54 in principal being paid down.
Some borrowers make only the minimum payments on credit cards. Imagine making only minimum payments on a $10,000 credit card with an interest rate of 15.49%
If the minimum payments were 1% of the balance, it would take 16 years to pay the card off. If you pay $100 more than the required minimum (as shown in the above example), your pay off time is reduced to 3 years! Virtually all experts recommend paying more than the minimum on your credit cards.
DO YOU NEED A QUICK LOAN TODAY? WE CAN HELP YOU!
Do you need a quick loan today? we can help you with the loan you need.
Are you in any financial mess and you need quick funds to start your own business?
Do you need a loan for the settlement of your old debts? or to pay off your whole bills?
Do you have a low credit score and are finding it hard to obtain a loan from your bank?
We offer loan at an interest rate of 3% and with no credit check, we offer Personal loans, Business loans, debt consolidation loans, venture capital, business start-ups loans, education loans, home loans, mortgage loans, or loan for any reason. We offer loans within the amount of $5,000 to $20 million. Loans are approved just in 2 business days, and the funds will be deposited in your bank account the next day.
To apply for a loan, send an email to: zionloanfirm.ltd@aol.com
We give loans to borrowers world wide. We can lend you in any country in the world.
This is true of most loans designed to span for 7 or more years. This includes:
- Mortgages
- Credit cards
- Long term business or personal loans
To illustrate, let’s look at our Small Business Loans, and compare the amortization to other long term lending products.
What is Amortization?
Amortization is the practice where the principal of a loan is paid down (amortized) over the life of the loan.
If you were to take out a home mortgage, most early payments go primarily toward interest. Over time, the percentage of your payment that represents principal gradually increases. The interest represented in each payment falls as principal paid rises over time.
In fact, let’s examine a 30-year fixed mortgage. Consider a $200,000 mortgage taken out at a 5% interest rate. Your payment for this mortgage would be $1,073.64 monthly.
An amortization table will show how much is still owed after each payment. More importantly, it will show that for the first several years, very little is paid down:
- $197,049.27 is owed after 1 year of payments
- $183,657.46 is owed after 5 years of payments
- $157,824.25 is owed after 10 years of payments
In fact, while your payment is fixed monthly at $1,073.64, your first mortgage payment will contain $833.33 in interest and $240.31 in principal, and if paid according to schedule, your 12th mortgage payment represents $822.09 going towards interest, and $251.56 going towards principal.
In the example above, after five years, you will have made $64,418.40 in payments. That $64,418.40 in payments, however, will only result in $16,342.54 in principal being paid down.
How Long Does it Take to Pay Down a Credit Card?
Some borrowers make only the minimum payments on credit cards. Imagine making only minimum payments on a $10,000 credit card with an interest rate of 15.49%
If the minimum payments were 1% of the balance, it would take 16 years to pay the card off. If you pay $100 more than the required minimum (as shown in the above example), your pay off time is reduced to 3 years! Virtually all experts recommend paying more than the minimum on your credit cards.
DO YOU NEED A QUICK LOAN TODAY? WE CAN HELP YOU!
Do you need a quick loan today? we can help you with the loan you need.
Are you in any financial mess and you need quick funds to start your own business?
Do you need a loan for the settlement of your old debts? or to pay off your whole bills?
Do you have a low credit score and are finding it hard to obtain a loan from your bank?
We offer loan at an interest rate of 3% and with no credit check, we offer Personal loans, Business loans, debt consolidation loans, venture capital, business start-ups loans, education loans, home loans, mortgage loans, or loan for any reason. We offer loans within the amount of $5,000 to $20 million. Loans are approved just in 2 business days, and the funds will be deposited in your bank account the next day.
To apply for a loan, send an email to: zionloanfirm.ltd@aol.com
We give loans to borrowers world wide. We can lend you in any country in the world.
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