A reset rate is the interest rate on a loan that is reset at regular intervals. The interval can be monthly, quarterly, semi-annually, or annually. The reset rate is usually reset at a rate that is higher than the initial rate on the loan. What are the 3 types of compound interest? There are three … Read more
A leveraged loan is a loan that is provided to a borrower with the intention of being used to finance a leveraged buyout (LBO) or another high-risk investment. The loan is typically provided by a consortium of banks and is senior in ranking to all other debt issued by the borrower. Leveraged loans are typically … Read more
A second chance loan is a type of financing that is typically extended to borrowers who have a checkered credit history. These loans are often used to help people rebuild their credit or to consolidate debt. Second chance loans usually come with higher interest rates and less favorable terms than traditional loans, but they can … Read more
Extra Credit with Revolvers is a type of loan that allows the borrower to extend the loan repayment period by making additional payments. This type of loan is typically used by borrowers who have a good credit history and want to avoid paying a higher interest rate. What is Revolver commitment? A revolver commitment is … Read more
Weighted average life (WAL) is a measure of the expected life of a loan, assuming that repayments are made as scheduled. It is used to price loans with level payments, such as mortgages, and can be used to compare loans of different types. The weighted average life is calculated by weighting each payment by the … Read more
An event of default is an occurrence that allows a lender to demand immediate repayment of a loan, or take other actions, such as foreclosing on collateral. The most common events of default are missed payments, but they can also be triggered by a change in the borrower’s creditworthiness, or a breach of other loan … Read more
A subordination clause is a clause in a loan agreement that subordinates the rights of one party to the rights of another party. The clause typically states that the rights of the party being subordinated are subordinate to the rights of the other party. The effect of the clause is to give the other party … Read more
A call loan is a type of loan where the borrower is only required to pay interest on the loan for a certain period of time, after which the entire loan must be repaid. This type of loan is often used by businesses to finance short-term projects or expenses. What do you call a loan … Read more
A delayed draw term loan is a loan in which the borrower does not have immediate access to the full loan amount. The borrower can access the funds at a later date, up to the maximum loan amount, as needed. The interest rate on a delayed draw term loan is typically fixed for the life … Read more
A balloon payment is a lump sum payment that is made at the end of a loan’s term. It is typically higher than the regular payments made during the loan’s term. The balloon payment is used to pay off the remainder of the loan’s balance. What is a balloon payment example? A balloon payment is … Read more
