Repaying the loan

With fixed-rate loans, early on in the term of your loan,  most of your monthly payment is paid towards interest, with a small portion of your payment allocated toward your principal balance. That gradually changes, though, and toward the end of your loan term your monthly payments mostly go toward repaying the principal.

With floating-rate loans, your monthly payment may change as the interest rate changes. That can benefit you if interest rates fall and your payment is smaller. But in some periods interest rates may rise, which means your payment will probably be larger.

Late loan payments

Just as with a credit card, if you're late with your monthly repayments, you'll face stiff penalties. And the negative information will probably be available in your credit report (CIB), which might make it harder for you to get a loan in the future. If you research your loan carefully and budget for the payments, though, a loan can be a great benefit to your financial life.