Standing Loan

AAA

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.

INVESTOPEDIA EXPLAINS '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. Balloon Loan

    A type of loan which does not fully amortize over its term. Since ...
  4. Amortized Loan

    A loan with scheduled periodic payments of both principal and ...
  5. Self-Amortizing Loan

    A loan for which the periodic payments consist of both principal ...
  6. Teaser Loan

    An adjustable-rate mortgage loan in which the borrower pays a ...
Related Articles
  1. Choose Your Monthly Mortgage Payments
    Home & Auto

    Choose Your Monthly Mortgage Payments

  2. Mortgages: Fixed-Rate Versus Adjustable-Rate
    Credit & Loans

    Mortgages: Fixed-Rate Versus Adjustable-Rate

  3. Understanding Your Mortgage
    Personal Finance

    Understanding Your Mortgage

  4. Mortgages: How Much Can You Afford?
    Budgeting

    Mortgages: How Much Can You Afford?

comments powered by Disqus
Hot Definitions
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  2. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  3. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  4. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  5. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  6. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
Trading Center