Standing Loan

DEFINITION of 'Standing Loan'

A type of loan where payments are made of interest only. Repayment of principal is required only at the end of the loan term. A standing loan is primarily used in real estate or automobile loans. This type of loan is less common, since most lenders are more comfortable with traditional amortizing loans, where principal is paid off gradually over time.

BREAKING DOWN 'Standing Loan'

A standing loan can be advantageous for certain borrowers, because the monthly payment is considerably lower. However, the borrower must have sufficient financial means to pay the full amount of the principal at the end of the loan term. Standing loans are generally considered more risky for the lender and thus usually come with a higher interest rate than a comparable amortizing loan.

RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Take-Out Loan

    A type of long-term financing (usually) on a piece of real property. ...
  3. Payment Shock

    The risk that a loan's scheduled future periodic payments may ...
  4. Teaser

    A document circulated to potential buyers of a specific security ...
  5. Teaser Rate

    An initial rate on an adjustable-rate mortgage (ARM). This rate ...
  6. Balloon Loan

    A type of loan which does not fully amortize over its term. Since ...
Related Articles
  1. Home & Auto

    Choose Your Monthly Mortgage Payments

    Exotic mortgages allow you to decide how much to pay. Find out how much they really cost.
  2. Credit & Loans

    Mortgages: Fixed-Rate Versus Adjustable-Rate

    Both of these have advantages and disadvantages depending on your financial needs and prospects.
  3. Personal Finance

    Understanding Your Mortgage

    We walk through the steps needed to secure the best loan to finance the purchase of your home.
  4. Budgeting

    Mortgages: How Much Can You Afford?

    Answering this means number-crunching as well as factoring in other considerations and expenses.
  5. Credit & Loans

    Understanding The Mortgage Payment Structure

    We explain the calculation and payment process as well as the amortization schedule of home loans.
  6. Home & Auto

    7 Car Buying Mistakes That Cost You Money

    These seven mistakes can have you spending much more than you should on your new car.
  7. Home & Auto

    When Is Buying A Car Better Than Leasing?

    People who lease a car are often more concerned with the short-term picture.
  8. Credit & Loans

    Best 3 Online Auto Loan Calculators that Include Tax

    Learn where you can find the best auto loan calculators online that include sales tax, and understand the different features these calculators offer.
  9. Investing

    Should You Make Your Teen Pay for Their First Car?

    Teenagers need to learn financial responsibility, but they also still need help when it comes to their first car purchase.
  10. Home & Auto

    How to Help Your Teen Buy Their First Car

    Help your teen secure a safe car and a low-interest loan through planning, research and co-signing.
RELATED FAQS
  1. What is the difference between "closed end credit" and a "line of credit?"

    Depending on the need, an individual or business may take out a form of credit that is either open- or closed-ended. While ... Read Full Answer >>
  2. In what instances does a business use closed end credit?

    The most common types of closed-end credit used by both businesses and individuals are mortgages and auto loans. Businesses ... Read Full Answer >>
  3. What are the typical requirements to qualify for closed end credit?

    Typical requirements for a consumer to qualify for closed-end credit include satisfactory income level and credit history, ... Read Full Answer >>
  4. What are some examples of simple interest loans?

    Two good examples of simple interest loans are simple interest car loans and the interest owed on lines of credit such as ... Read Full Answer >>
  5. How can I use the correlation coefficient to predict returns in the stock market?

    Simple interest is most commonly seen in short-term loans, such as those from payday lenders or pawn shops. You might see ... Read Full Answer >>
  6. What is the difference between secured and unsecured debt?

    The difference between secured and unsecured debt is the presence or absence of collateral backing. Secured Debt For a debt ... Read Full Answer >>
Hot Definitions
  1. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  2. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  3. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  4. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
  5. Dark Pool Liquidity

    The trading volume created by institutional orders that are unavailable to the public. The bulk of dark pool liquidity is ...
Trading Center