Credits are basically not repayable
Credits are basically not repayable, with redemption when the contract period is over. The contract period can vary from days to up to several years (here the limitation period plays a role). Credit cards or purchase cards can still have a down payment agreement: There may be repayment with a certain number of kroner per month. month or with a certain percentage of spent (borrowed) amount. This will cover interest, commission and any agreed repayment. Unless otherwise agreed, a credit can be drawn up to the credit limit as needed as long as the credit agreement lasts. When the contract period or credit period is over, the creditor can repay the credit in full, or renew it if necessary.
Loans are less expensive than a loan
The principle of serial loans is that the loan amount is divided into equal installments, depending on how long the loan will run. For example: If you borrow an amount of USD 12,000 to be repaid over one year, the repayment will be per. USD 1,000 per month. The interest rate is calculated at an annual percentage, for example 10% pa (per annum – per year). Overall, serial loans are less expensive than a loan that is repaid according to the Annual principle. The special thing about serial loans is that the installment amount (installments + interest + termination fee) becomes smaller and smaller for each payment. In practice, only the interest amount is reduced. The serial loan starts with high monthly, quarterly or semi-annual installments. As the loan decreases, the interest rate and consequently the installment amount are reduced.
Annual loans are today the most common form of loan. This type of loan provides a better way of dividing the loan expenses by having the installment amount equal over the entire loan period.