A single payment loan is a loan at which the entire amount is due at the end of the term or at the time of the loan’s maturity. This type of loan is a term secured commercial loan to a business person or company that has a fixed maturity, often three to 10 years, and is repaid with interest with one cumulative payment. If the single payment loan is in the form of a line of credit, the funds are drawn down shortly after the agreement is signed.
Financial advisers do not recommend single payment loans to borrowers who take out moderate-size loans and do not have a strategy for paying off the loan at the end of the term. A typical single payment loan would have an interest rate that is higher than prime, but it provides borrowers with a lot of flexibility. However, the flexibility comes with a price, and interest only loans can become expensive and can be quite costly in the end.
Who it’s for
Single payment loans are for affluent borrowers. The ideal borrower would be an executive who earns a modest salary and whose main income is from bonuses once or twice a year. The single payment loan provides the lowest possible monthly payment for the lean months and allows the executive to pay down big chunks of principal when bonus time rolls around. Business owners with unpredictable incomes also might benefit.
What you will need to secure this loan
In order to obtain a single payment loan, interested applicants will need to contact a local lending institution and inquire about the different options and rates available. Personal and financial history, including a credit report, will need to be made available to the lending institution.
