0 Types of debt

A basic [loan] is the simplest form of debt. It consists of an agreement to lend a principal sum for a fixed period of [time], to be repaid by a certain date. In commercial loans [interest], calculated as a percentage of the principal sum per year, will also have to be paid by that date.

In some loans, the amount actually loaned to the debtor is less than the principal sum to be repaid; the additional principal has the same economic effect as a higher interest rate .

A [syndicated loan] is a loan that is granted to companies that wish to borrow more money than any single lender is prepared to risk in a single loan, usually many millions of dollars. In such a case, a syndicate of banks can each agree to put forward a portion of the principal sum.

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