Graduated payment

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Graduated payment

Repayment terms calling for gradual increases in the payments on a closed-end obligation. A graduated payment loan usually involves negative amortization.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Graduated Payment

A system of making payments on a loan in which the payments increase gradually over the life of the loan. That is, the payments start low and increase by a certain percentage, usually 7% to 12% each year, until the full payment level is reached. When a bank determines whether to make a graduated payment loan, it only considers whether the borrower can make the low, initial payments. This allows a person who would not otherwise qualify for a loan to borrow, usually in order to buy property. The risk is the possibility that needed income will not materialize in the future, making the borrower unable to repay the loan. Graduated payment loans usually have fixed interest rates and involve negative amortization.
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References in periodicals archive ?
Fixed payments add more than $20,000 to the example $30,000 balance; graduated payments would inflate your balance even more.
Until recently, the policy benefits would only be paid when the diagnosed condition reached an advance stage but the introduction of graduated payments by a number of leading insurers means that benefits can be paid in stages, starting with a portion of the cover even if the condition is at early stages.
Many policy options are being discussed regarding how to reduce some of the burden, including graduated payments that reflect the lower starting salaries of new graduates, and improve the performance of these loans."
The government originally wanted to pay graduated payments to the bottom 70 percent and nothing to the top 30 percent of families.
Options include standard, extended, income contingent, income-based, and graduated payments. If you're not earning much, consider the extended program, under which you can pay smaller monthly payments over 25 years (but you'll pay more in interest).
One pledge was a million-dollar commitment that was altered from a five-year payout to a seven-year payout with more graduated payments during the final three years.
Unfortunately, while we qualify for deferrals and low income graduated payments, the interest on our student loans continues to accumulate, then capitalize and compound so that each day we work for the state, our debt increases.
In his letter, he has suggested a one-off payment of pounds 400,000, or graduated payments until 2003.
* Ask lenders about repayment options such as graduated payments, income-sensitive repayment plans, or interest-only deferment options.
He said the show's cancellation because of the foot-andmouth crisis would have a serious impact on the society's finances over the next three years and a one-off payment of pounds 400,000 or graduated payments up until 2003 would help the society continue their "vital role in the farming industry".

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