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Simple English definitions for legal terms
term loan
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A quick definition of term loan:
A term loan is when someone borrows money and agrees to pay it back by a certain date, usually more than a year from when they borrowed it. They can't pay it back early without getting charged extra. It's like borrowing a toy from a friend and promising to give it back in a week, but you can't give it back sooner or you'll have to give them extra toys.A more thorough explanation:
A term loan is a type of loan that has a specific due date, usually more than one year from the date it was issued. This means that the borrower has to pay back the loan by a certain date, and if they pay it back earlier, they may have to pay a penalty.
For example, if a business needs to buy new equipment, they may take out a term loan to pay for it. The loan may have a due date of five years from the date it was issued, and the business will have to make regular payments until the loan is paid off in full.
Another example is a student loan. When a student takes out a loan to pay for their education, it is usually a term loan. The loan has a specific due date, and the student has to make regular payments until the loan is paid off in full.
Overall, a term loan is a loan that has a specific due date and requires regular payments until it is paid off in full.