Essential Loan Terms: What Borrowers Must Know

Before borrowing money, like for a personal loan, it's important to understand the terms.

The principal is the original amount you borrow.

Interest is the cost of borrowing.

EMI is what you pay monthly.

Loan tenure is how long you have to pay it back.

APR shows the total cost yearly.

You can pay early (prepayment).

Banks charge fees (processing fees).

Sometimes, you can pause payments (moratorium).

You might use something valuable as collateral, like a house.

LTV shows how much you can borrow based on an asset's value.

Understanding these helps you borrow wisely.