Financing is essentially a way to borrow money to purchase something expensive, like a car, house, or business equipment, instead of paying the full amount upfront. The lender—usually a bank, credit union, or financial company—provides the funds, and you agree to repay it over time, often with added interest.
Here’s a simple breakdown:
Loan Amount (Principal): The total money you borrow.
Interest: The cost of borrowing, usually a percentage of the loan amount.
Repayment Period (Term): The time over which you repay the loan (e.g., 3–7 years for a car loan).
Monthly Payments: The amount you pay each month, which usually includes part of the principal and interest.
