wikiHow Glossary for Calculating an Installment Loan Payment Remember to carefully read and understand the terms and conditions of any loan before accepting it. This glossary is for informational purposes only and should not be considered financial advice. * Amortization: The process of gradually paying off a loan over a set period of time through a series of equal payments. * Annual Percentage Rate (APR): The total annual cost of borrowing money, expressed as a percentage of the loan amount. * Balloon Payment: A large, one-time payment that is due at the end of an installment loan term to pay off the remaining balance. * Co-Signer: A person who signs a loan agreement with the borrower and is responsible for repaying the loan if the borrower is unable to. * Collateral: An asset, such as a house or car, that is used to secure a loan and can be seized by the lender if the borrower defaults on the loan. * Default: Failure to make loan payments as agreed upon in the loan agreement. * Installment Loan: A loan that is repaid in fixed, regular payments over a set period of time. * Interest: The cost of borrowing money, expressed as a percentage of the loan amount. * Loan Amount: The total amount of money borrowed. * Loan Term: The length of time over which the loan will be repaid. * Monthly Payment: The amount of money that is due each month to pay off an installment loan. * Principal: The amount of money that is borrowed, not including interest. * Promissory Note: A legal agreement between the borrower and lender that outlines the terms and conditions of the loan. * Refinance: The process of taking out a new loan to pay off an existing loan, often with better terms or a lower interest rate. * Secured Loan: A loan that is backed by collateral, such as a house or car. * Unsecured Loan: A loan that is not backed by collateral and is based solely on the borrower's creditworthiness. * Variable Interest Rate: An interest rate that changes over time based on market conditions. * Late Payment Fee: A fee charged by the lender when a borrower misses a loan payment. * Loan Origination Fee: A fee charged by the lender for processing and issuing a loan. * Grace Period: A period of time after a loan payment is due during which the borrower can make the payment without incurring a late payment fee. Page