Instalments

Loans are usually repaid in fixed monthly instalments (the “constant payment method”).

Various payment alternatives exist for a line of credit, including:

• Payment of periodic instalments comprising interest calculated only on the capital advanced or drawn down at the time, with repayment of the borrowed amount at the end of the period
• Payment of periodic instalments comprising interest at agreed intervals (on a quarterly, six-monthly or annual basis), repayment of any capital in excess of the credit limit, and repayment of the remainder at the end of the period.
• Payment of a fixed minimum instalment, usually each calendar month. The available capital is often increased by the repaid amount. This is known as a “revolving credit”, and is a common form of consumer credit.