Loan Payment

Topic

Financial Literacy

Definition

A loan payment is the amount of money that a borrower pays back to a lender at scheduled intervals.

Description

Loan payments are crucial for managing debt and ensuring repayment, including both principal and interest components. Understanding the structure of loan payments helps individuals budget effectively. In real-world applications, borrowers often face challenges when financial situations change, requiring adjustment to payment plans. Algebraically, the calculation for loan payments is straightforward, offering crucial lessons in budgeting and financial management. A teacher might summarize, "When you repay a loan, your payment includes part of what you borrowed and part of the interest, making it essential to know how much to pay each time."

 The food truck owner took out a loan to start her business 
and loan payments come from food sales.

For a complete collection of terms related to Financial Literacy click on this link: Financial Literacy Collection.