Capital borrowed, the amount of a loan granted to a borrower

Amount of a loan granted by a financial institution

Amount of a loan granted by a financial institution

The borrowed capital is the amount of a loan granted by a financial institution for a depreciable credit. For a revolving credit, it is used capital.

We are talking about borrowed capital to the extent that a financial institution, called a lender, lends money to a client, called a borrower. The repayment commitment of the credit is periodic. In general every month. It is said that the sum you repay each month is used to depreciate the capital borrowed.

Capital and interest

Capital and interest

To understand precisely the credit transaction in which the lender and the borrower are mutually committed, know that there are two fundamental and distinct notions underlying any repayment of the loan. ready : capital and interests. The borrowed capital is the exact amount you borrowed and will repay on a regular basis. Interest is the amount you will pay to the lender at the same time to pay for the service.

Amortize capital

Amortize capital

These two sums to pay, capital and interest, constitute the monthly payment paid by the borrower. If each month you pay the same monthly payment, the share of amortization of your capital varies. At first you pay more interest than capital and over the months the proportion is reversed.

Amortization table

Amortization table

This distribution between the reimbursed capital and the interest will be given by Sofinco in the form of an amortization schedule at the time of the contractualization of yourborrowing . This is a document that clearly establishes the first month of your repayment until the last, the amount of each monthly payment with the distribution of the capital, interest and insurance premium if any. Your  advisor can even propose you to postpone your deadlines at the beginning or during the contract subject to its smooth operation. The monthly deferral lengthens the repayment term and increases the cost of credit.