Aimed exclusively at companies
The term “Term Loan” refers to a type of loan that is aimed exclusively at companies. Because even in the world of corporate loans, there are again different sub-loans, which differ in various factors. A term loan should be used to facilitate investment procurement for companies. Often a fixed investment is even the only way to get a term loan from banks. Both repayment and repayment are not repaid on the term loan during the repayment term.
The charged debt will be repaid on the term loan at a predetermined time.
Term Loan in overview
The Term Loan is an offer aimed specifically at companies. Through the term loan, companies receive the option to remain competitive through cheap loans.
Generally, the term loan is unexplicable and associated with a fixed repayment. One calls the Term Loan also as a fixed rate loan.
When a term loan is taken up, the interest rates, the period and the beginning of the term are fixed in advance. Flexibility for the borrower is not provided for the term loan. One speaks also of a fixed sentence credit. Often Term Loans are chosen if the company needs additional funds for an existing loan. A premature redemption is not provided for Term Loan, but should this be sought, high fees are due. Due to the lack of flexibility, as an alternative should also be considered on the current account credit.
Even with the loan amount, the flexibility is at least limited. For a term loan, the minimum amount is already extremely high. Of course, this can be both an advantage and a disadvantage. Often, a large sum is needed just for fixed investment of a company. But if a company only needs a small loan, Term Loan is hardly conceivable.
How expensive is the term loan?
The costs of a term loan are determined by various factors. On the one hand, the term is absolutely crucial, but also the creditworthiness of the company and the collateral offered have contributed significantly to the valuation. Of course, if new modern equipment is purchased, it will serve as a good security, since they can be repelled in an emergency.
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