Graduated payments
Encyclopedia
Graduated Payments are repayment terms involving gradual increases in the payments on a closed-end obligation. A graduated payment loan
typically involves negative amortization
, and is intended for young people who currently have low income but foresee a greater future income. These terms are only offered when banks have reason to assume that the borrower's income will rise during the 10 year loan period.
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
typically involves negative amortization
Negative amortization
In finance, negative amortization, also known as NegAm, deferred interest or graduated payment mortgage, occurs whenever the loan payment for any period is less than the interest charged over that period so that the outstanding balance of the loan increases...
, and is intended for young people who currently have low income but foresee a greater future income. These terms are only offered when banks have reason to assume that the borrower's income will rise during the 10 year loan period.