Interest capitalization refers to the practice of adding interest costs incurred on a loan to the outstanding loan balance. This means that instead of paying the interest separately, it is added to the total loan amount. As a result, the borrower ends up owing more overall, including the interest that has been capitalized.
Full definition
Synonyms for individual words can be found below.
«interest»
«capitalization»
Sentences with «interest capitalization»
- In any case, if you apply for forbearance or deferment and your loans continue to accrue interest, consider making interest - only payments to avoid the negative impacts of interest capitalization. (studentdebtwarriors.com)
- These payments will be less than your normal monthly payment, and will help you avoid interest capitalization once the forbearance is over. (studentdebtwarriors.com)
- In a process called interest capitalization, the deferred interest is then added to the loan's outstanding balance — increasing the total amount owed. (valuepenguin.com)
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