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. 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. Adjustable-Rate Mortgage - ARM

    A type of mortgage in which the interest rate paid on the outstanding ...
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. Trading Strategies

    Eyeing a Loan? Consider Skipping the Banks

    Peer-to-peer lending platforms, such as Lending Tree, Lending Club and Prosper, offer borrowers newfound leverage. Here's a look.
  7. Credit & Loans

    8 Top Alternatives to Car Title Loans

    Before you sign up for a car title loan, investigate these 8 alternate strategies.
  8. Credit & Loans

    Car Title Loan Requirements

    Here's a list of what you need to qualify for a car title loan. Most important: having sole ownership of your car with no liens.
  9. Credit & Loans

    Car Title Loan Limits

    You can usually get 25% to 50% of a car's value - but could pay more in interest than you borrowed if the loan rolls over a lot before it's paid off.
  10. Credit & Loans

    States That Allow Car Title Loans

    Only some states permit car title loans – and those that do may have restrictions. Check this list to see what to expect.

You May Also Like

Hot Definitions
  1. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  2. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  3. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  4. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  5. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  6. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
Trading Center