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.
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.
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.
These documents are finalized at the loan closing. However, the original documents will outline the prospective repayment plan for the borrower as well.
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.
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.
- The Free Dictionary: Provision
- The Free Dictionary: Repayment
- Loanizer: What You Need to Know Before Taking a Loan
- The Free Dictionary Financial Dictionary. "Lender." Accessed Aug. 17, 2020.
- Experian.com. "Debt Reaches New Highs in 2019, but Credit Scores Stay Strong." Accessed Aug. 17, 2020.
- Wells Fargo. "How to Get a Loan: Learn what lenders look for." Accessed Aug. 17, 2020.
- Bank of America. "Homebuying and debt: What you need to know." Accessed Aug. 17, 2020.
- U.S. Small Business Administration. "Loans: Eligibility requirements." Accessed Aug. 17, 2020.
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.