The Difference between a Revolving Loan and a Term Loan

Why is that you will find loans that come with options of 1, 3, 5 or 7 year term with fixed installments while others don’t? It is simple, in Singapore; there are two types of loans. One of them is a revolving loan while the other one is a term loan.

Usually, a term loan is offer for as specify period of time. Normally 3 or 5 years and also comes with fixed installments throughout the repayment period. Payment for each installment includes the interest payments and principal payments. Since, it less flexible when compared to revolving loans. Then you will also find out that the interest rates are also low.

On the other hand, a revolving loan is normally issue as an overdraft or credit. You are usually allows drawing money until a certain limit is achieve and you will only pay for the interest rates as long as the line is draw. Once you have completed paying for the credit, you are allows to get more credit. Since this type of loan is very expensive to repay, with high interest rates, it is advisable to take it only when it is very necessary

Bear in mind that unsolicited cheques and balance transfers sent to you by your bank is revolving credit that will normally tap on your credit card limits.

Applied Interest Rate vs Effective Interest Rate

Why it that there exists 2 interests is rates where one of them is almost double the other. Should you only take into consideration the higher one? This can be really confusing but we will iron it out.

The advertised interest rate (AIR) is the lower one and ranges between 6 to 15 percent per annum.

The EIR is actually the real cost of taking a loan. It is also known as the effective interest rate. It is established by making a determination on whether interest will be paid on the reducing balance as the loan goes down or whether it will be charged upfront on the whole amount. In case, you have a monthly rest calculation method. EIR will be equal to AIR since interest will be calculating on the basis of reduce balance of the loan.

Normally, the EIR will take into account the frequency of your repayments and also whether installments will be pay in equal payments. It normally takes into account whether installments are in equal amounts and the frequency of the payments. For a loan to be repay in 1 year or less, EIR will be higher if you will be require to make monthly period than when require to pay as a lump sum.


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1st Credit SG Pte Ltd formerly known as Ariksha Moneylender providing best service from 1989. 1st Credit SG moneylender is organized licensed moneylender from Ministry of Law Singapore. In case, you need some money for your special wedding day, you may reach 1st Credit SG Pte Ltd . Actually, we are supply a lot of loan product to suit different people different needs.

In fact, improvement market of money lending is benefit to most of the overall public. In case, you standing up to emergency subsidize issue there are various resources open. Commonly, money moneylender loan support process is fast than bank and there is flexibility of repayment. Transversely over Singapore there are a lot licensed money lender that endorsed by Ministry of Law.

1st Credit SG licensed moneylender the most reliable and Best Licensed Moneylender in Singapore. Our experienced consultancy can convey best services for every client. Other than that, 1st Credit SG Pte Ltd is offering lowest interest charge for all loan products. Our loan contract is direct and clears from others dishonest money lenders.

If you have any questions, may visit our website www.moneylenderhub.com
Do not hesitate to call us at +65 6266 5422 or email 1stCreditSGPteLtd@gmail.comVisit our office at 149 Rochor Road #01-07 Fu Lu Shou Complex Singapore 188425.

 

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