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Loans

Annual Reducing Method

Let's dive into the concept of diminishing balance method, a technique used to calculate interest on loans. The reduced principal is taken into consideration at the end of each year, but since loan repayments are based on Equated Monthly Installments (EMI), the interest is calculated on the original loan amount for twelve months. Afterward, the payments towards the principal are factored in. This approach may not be the most advantageous for borrowers.

EMI

An important concept in finance is the Equated Monthly Installment (EMI), which refers to the amount of money paid by a borrower each month towards the repayment of a loan. ...

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Penal interest

In the realm of finance, it is crucial to understand the concept of penal interest. This term refers to the additional fees incurred when a borrower fails to make timely ins...

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Refinance

A mortgage is a financial term for a loan secured by property, typically used for purchasing a home. In some cases, a homeowner may choose to take out a second mortgage, als...

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Ballon Payment

The term "balloon payment" refers to the final and often larger payment on a debt, typically occurring after a series of smaller payments have been made. This type of paymen...

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