What are repayment format ?

Modified on Mon, 25 Mar 2024 at 01:56 PM

There are 3 repayment formats as follows

1. Amortizing repayment: Gradually repay the principle. Investors will receive both principal and interest repayments in each installment. There are 2 subtypes:

  • Equated repayment: repaying equal amounts of principal in each installment. For example, paying 10,000 THB every month over the loan period.
  • Step-up repayment: increasing the principal amount at predetermined intervals. For example, paying 10,000 THB for 6 months and then increasing it to 20,000 THB for the following 6 months.

2. Bullet repayment: Repay the entire principle amount when it matures.
Investors will receive the principal repayment on the last installment and the interest according to the schedule either one-time interest, quarterly interest or monthly interest. Commonly found in short bond term with maturities of 2-6 months.

3. Hybrid repayment: Initially paying only the interest on a loan, and subsequently repaying both the principal and interest in later stages. For instance on the 1-3 installments only the interest is repaid, and starting from installment 4 onwards, both interest and principal are repaid.

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