Custom Instalment Loan Schedule

Loans can also be set up with a repayment schedule with a custom instalment amount. Under this model any arbitrary amount can be selected as the amount to be periodically repaid. Ideally this amount should exceed the interest acquired in the said period.

If the instalment amount is larger than the interest payable, the loan is similar to the interest only loan but with early principal payments on each repayment.

If the selected instalment amount is less than the interest payable, the loan is similar to the interest only loan which is underpaid on each repayment. This will result in larger final interest payable as opposed to the interest only loan.

Although a loan with a custom instalment amount is similar to the interest only loan, the advantage of selecting a lower custom instalment amount can help the borrowers in keeping up with the required payments early on and not having to default at early stages of utilising the loan. For instance, in cases when the nature of the loan is farming, a farmer may have to wait for the crops to grow for months before getting any yield but has to keep making the repayments on the loan after just a month.