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Accelerated Payments

What is 'Accelerated Payments'

A term associated with making additional unscheduled payments on a loan at predetermined, or random intervals. Making additional unscheduled payments reduces the principal balance of the loan, meaning that more principal and less interest is paid off in subsequent payments. Making accelerated payments will lead to the early pay-off of a loan.

Explaining 'Accelerated Payments'

Most loans have an amortization schedule that defines how much principal and interest will be paid with each scheduled payment, so that the loan will be paid-off at the end of an established term.

Also, the amount of interest paid with each payment is a function of the remaining principal balance of the loan at that time. The higher the rate of interest on a loan, the more beneficial it can be to make accelerated payments. The faster the borrower applies accelerated payments toward the principal balance of a loan, the more interest that is saved.


Further Reading


Evidence on the determinants and economic consequences of delegated monitoring
www.sciencedirect.com [PDF]
… debt repayment must be accelerated when the payment on any other debt is accelerated, cross-acceleration … debt due after the bank debt matures in the presence of a cross-acceleration provision because the bank's claims will be diluted if they accelerate payments …

The accelerated binomial option pricing modelThe accelerated binomial option pricing model
www.jstor.org [PDF]
… debt repayment must be accelerated when the payment on any other debt is accelerated, cross-acceleration … debt due after the bank debt matures in the presence of a cross-acceleration provision because the bank's claims will be diluted if they accelerate payments …

Peer-to-peer financing mechanisms to accelerate renewable energy deploymentPeer-to-peer financing mechanisms to accelerate renewable energy deployment
www.tandfonline.com [PDF]
… debt repayment must be accelerated when the payment on any other debt is accelerated, cross-acceleration … debt due after the bank debt matures in the presence of a cross-acceleration provision because the bank's claims will be diluted if they accelerate payments …

Underwriting 1.5 C: competitive approaches to financing accelerated climate change mitigationUnderwriting 1.5 C: competitive approaches to financing accelerated climate change mitigation
www.tandfonline.com [PDF]
… debt repayment must be accelerated when the payment on any other debt is accelerated, cross-acceleration … debt due after the bank debt matures in the presence of a cross-acceleration provision because the bank's claims will be diluted if they accelerate payments …

Financial contracting under extreme uncertainty:: an analysis of Brazilian corporate debenturesFinancial contracting under extreme uncertainty:: an analysis of Brazilian corporate debentures
www.sciencedirect.com [PDF]
… debt repayment must be accelerated when the payment on any other debt is accelerated, cross-acceleration … debt due after the bank debt matures in the presence of a cross-acceleration provision because the bank's claims will be diluted if they accelerate payments …

Will the financial-economic crisis of 2008-2009 accelerate monetary integration in the EU?Will the financial-economic crisis of 2008-2009 accelerate monetary integration in the EU?
search.proquest.com [PDF]
… debt repayment must be accelerated when the payment on any other debt is accelerated, cross-acceleration … debt due after the bank debt matures in the presence of a cross-acceleration provision because the bank's claims will be diluted if they accelerate payments …

Accelerated depreciation and the cost of capitalAccelerated depreciation and the cost of capital
www.jstor.org [PDF]
… debt repayment must be accelerated when the payment on any other debt is accelerated, cross-acceleration … debt due after the bank debt matures in the presence of a cross-acceleration provision because the bank's claims will be diluted if they accelerate payments …

The roles of accelerationThe roles of acceleration
heinonline.org [PDF]
… debt repayment must be accelerated when the payment on any other debt is accelerated, cross-acceleration … debt due after the bank debt matures in the presence of a cross-acceleration provision because the bank's claims will be diluted if they accelerate payments …

The evolution of buyout pricing and financial structure in the 1980sThe evolution of buyout pricing and financial structure in the 1980s
academic.oup.com [PDF]
… debt repayment must be accelerated when the payment on any other debt is accelerated, cross-acceleration … debt due after the bank debt matures in the presence of a cross-acceleration provision because the bank's claims will be diluted if they accelerate payments …



Q&A About Accelerated Payments


What does making additional unscheduled payments reduce the principal balance of a loan?

Making additional unscheduled payments reduces the principal balance of a loan, meaning that more principal and less interest is paid off in subsequent payments.

Why should we pay someone who owns a piece of land ?

We should pay someone who owns a piece of land because he has invested his time and money into developing it into something useful . He has put forth effort into making it what it currently is so he deserves compensation from anyone who benefits from his work .

What are factor payments?

Factor payments are the income people receive for supplying the factors of production.

How does making accelerated payment lead to early pay-off of a loan?

Making accelerated payment leads to early pay-off of a loan because it reduces the amount of time needed for paying off the debt.

What are capital goods used for in economics?

Capital goods are also referred to as fixed assets or real capital, they provide economic benefit over multiple uses, such as machinery, buildings, tools etc.

What is accelerated payments?

Accelerated payments are additional unscheduled payments on a loan at predetermined or random intervals.

What is labor used for in economics?

Labor is a specific factor of production and payment is made in the form of wages.

How do you categorize factor payments according to the services provided by productive resources being rewarded?

Payments can be categorized according to the service provided by productive resources being rewarded. As wages are being paid for services of labor, interest is paid for the services of capital, rent is paid for the services provided by land or other immovable assets and profit is for entrepreneurship's contribution towards production process.

What is land used for in economics?

Land is used to produce goods and services.

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