What is the preparation?
PACAPYMENT is a timely or advance payment of a loan. Many financial institutions allow debtors to carry out these premature installments without fines. Other institutions are penalizing the debtor because timely repayment reduces the return on the creditor's investment and translates into an impartial interest on the loan. In both scenarios, credit documents or contracts specify whether the penalty has been punished. In many regions, there are laws against billing fees for preparation.
Many individuals use preparations as a way to reduce interest costs or shorten the length of the loan if there are no other options. Most people with a bad loan are forced to finance undesirable interest rates, and until a credit score and a credit history of a person are improving, it is unlikely to find another creditor offering a better rate. In order to save interest costs and reduce the debt ratio to income, the debtor can make a preparation or several backups to the current loan. This can improve the scoreIndividuals and open other options for better future financing in addition to reducing the total financial burden of the individual.
Although some debtors can afford to provide a loan backup such as a mortgage, many do not realize the potential savings that result from the preparation. There are two common ways to calculate the creditor. The first allows the debtor to make a payment that will directly reduce the loan amount. For example, assume that the debtor owes $ 500 (USD) per month for a mortgage. The bank that financed its loan allows him to earn another deposit for $ 100 per month, which would significantly reduce the amount of interest he would pay and the time that would require repayment of the entire mortgage.
The second way in which lenders allow debtors to make the dates back to the due date for the next payment. For example, if the debtor owes $ 500 per month for his mortgage and pays 1,000USD per month, the bank would extend the due date for the next payment for the next month because it subscribed to the equivalent of the next month of payment. Suppose its payments are payable first of each month and the debtor pays one month of $ 6,000. The bank would extend the due date for its further payment throughout the year.
Although individuals can afford to prepay, many debtors would rather keep additional funds in the savings account. Others compare the interest rate on the loan and the interest rate on the certificate (CD) or another type of investment and decide that it is wiser to invest funds than to repay the credit balance. Of course, other debtors cannot afford to make further payments.