A fuller guide to this term is on the way. In the meantime, the related terms below explain the ideas around it.
Related MoneyPedia terms
- PrincipalThe original amount of money you borrow, separate from the interest and fees that get added on top of it.
- AmortizationThe process of paying off a loan through scheduled payments that cover both interest and principal until the balance reaches zero.
- Debt AvalancheA payoff strategy that targets the highest-interest debt first while paying minimums on the rest to reduce total interest.
- Debt SnowballA payoff strategy that clears the smallest balance first for quick wins, then rolls those payments into the next debt.
- Loan TermThe length of time you have to repay a loan in full, which affects both your monthly payment and total interest paid.
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Plain-English education — not personalized legal, tax, or investment advice.