Today, we are going to discuss what is an interest bearing loan and how it can help you. The basic idea behind the loan is that you pay a fixed amount and after a certain period of time, you will get back your money with interest.
The interest rates of this type of loan can be anywhere between 1% and 10%. In most of the cases, this type of loan is used by students who want to complete their education or buy a house. It is also helpful for people who want to invest in something and want to get returns on their money.
There are different types of loans available in the market which can be easily applied online. If you are a new borrower, then you need to check the terms and conditions of the loan as there are some hidden charges. So, before applying for the loan, make sure that you know all about it.
Here are 4 things that you should know about interest bearing loans:
Interest rates
When you apply for any type of loan, the interest rate will play an important role in your decision making process. The interest rate is the percentage of the loan that you will pay on the loan amount. There are two types of interest rates available in the market, fixed and variable. Fixed interest rate is where the interest rate remains the same throughout the period of the loan. Whereas, the variable interest rate is based on the market rate.
Flexibility
As we have already mentioned, the interest rate of this type of loan varies according to the market rate. The market rate is usually fluctuating every day and so, if you want to get a fixed rate loan then you will have to be flexible about the time of payment. This way, you will be able to get a fixed rate loan without worrying about the rate changes.
Duration
The duration of the loan decides the number of months that you will have to pay back your loan. The loan can be for 1 to 12 months and the longer the duration the more amounts you will have to pay back. The loan repayment period can be extended as per your convenience.
Repayment
In most of the cases, people are unaware of the repayment period of this type of loan. You may think that it will take a lot of time to repay the loan but in reality, it takes less than 2 months. The repayment period is based on the number of months that you will be using the loan for. So, if you are taking a loan for 2 years then you will need to pay back the loan in two years.
Conclusion:
Interest bearing loans are helpful for the borrowers who want to get financial assistance. It is important to know the details about the loan so that you can avoid any kind of trouble. If you are planning to apply for a loan, then you should check all the terms and conditions of the loan first.