what is an open ended loan? And how is an open ended loan different from a closed end loan?
2007-03-23 15:02:34 · 5 answers · asked by ohio_mike 2 in Business & Finance ➔ Renting & Real Estate
This is a mortgage by the way.
2007-03-23 15:30:07 · update #1
The closed loan is one in which you get a fixed amount of money. The terms of the loan are fixed in the very beginning. As an example you borrow $10,000 at a 7.5% interest to be paid back at a predetermined amount for a fixed time period like $400 a month for 48 months.
An open loan is one in which you are approved to borrow up to $10,000 within a fixed time period. The interest rate is not necessarily fixed, it depends when you borrow the mony and what the prime rate is at that time.
2007-03-23 16:11:32 · answer #1 · answered by ttpawpaw 7 · 0⤊ 1⤋
Sounds like a line of credit to me which is a pre-approved amount of money that the bank has agreed to loan you that you can spend as required. Either all of it or none of it and the loan is available indefinitely. Also, payments are flexible in that they don't bug you for principle payments so long as you pay the interest charges every month.
If you are building a house, then maybe this is the way your mortgage will start off until the house is completed.
A closed end loan sounds more like a normal loan where you borrow a specific amount of money at once and pay it back with regular payments (like a car loan).
That's what my guess would be. I've never heard of an open ended loan before.
2007-03-23 16:04:03 · answer #2 · answered by babypocket2005 4 · 0⤊ 0⤋
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RE :What is an open ended loan?
what is an open ended loan? And how is an open ended loan different from a closed end loan?
Update: This is a mortgage by the way.
Follow 3 answers
2016-10-10 23:57:47 · answer #3 · answered by Buffy 6 · 0⤊ 0⤋
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2016-11-28 02:25:02 · answer #4 · answered by ? 4 · 0⤊ 0⤋
i would like to know that myself?
2007-03-23 15:06:28 · answer #5 · answered by sparky 4 · 0⤊ 1⤋