What Is a Repayment Provision?

by Lynn Lauren ; Updated July 27, 2017
A debt is a loan with a set repayment plan.

When a borrower enters into a loan with a lender, documentation is signed outlining the terms of payment on the debt. These terms are known as the repayment provision.

Significance

The terms of repayment on a debt can greatly alter the overall cost of the loan. If the interest rate is low and the length of the loan is short, the interest paid could be very low. However, the longer the term and the higher the interest rate, the more interest is paid by the borrower.

Function

The repayment provision of a debt outlines exactly the payment plan for the loan. The borrower will know exactly when to pay what amount to the lender due to these documents.

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Time Frame

These documents are finalized at the loan closing. However, the original documents will outline the prospective repayment plan for the borrower as well.

Considerations

A borrower should shop around and consider several offers prior to procuring a new loan to ensure the repayment provisions are in line with his financial ability to repay.

Benefits

While the repayment provision shows the borrower the amount owed and when it is owed, it also protects the borrower from the lender changing any terms of the original agreement.

About the Author

Lynn Lauren has been a professional writer since 1999, focusing on the areas of weddings, professional profiles and the banking industry. She has been published in several local magazines including "Elegant Island Weddings." Lauren has a Master of Business Administration and a Bachelor of Business Administration, both with marketing concentrations from Georgia Southern University and Mercer University, respectively.

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