Repayment mechanics & timelines

Principal vs. interest vs. outstanding balance

Three key components of your loan over time.

• Principal: the amount you originally borrowed.

• Interest: the cost of borrowing, calculated on your outstanding balance.

• Outstanding balance: principal plus any accrued interest and unpaid fees that you still owe.

Tenure / tenor

The length of time you take to fully repay your loan.

• Longer tenure = lower monthly instalment but more total interest paid.

• Shorter tenure = higher monthly instalment but lower total cost.

Approval vs. disbursement vs. drawdown

Key milestones between “application” and “cash in your account”.

• Approval: loan provider agrees in principle to lend, often subject to conditions.

• Disbursement: money is released to your bank account or directly to other creditors (for DCP/debt consolidation).

• Drawdown: for revolving or multi-tranche facilities, each time you actually tap the approved limit.

Fixed vs. variable (floating) interest rate

Whether your interest rate can change over time.

• Fixed rate: your interest rate is locked in for a defined period; monthly payments are predictable.

• Variable/floating rate: pegged to a benchmark (e.g. SORA for mortgages) plus a spread; instalments can change when the benchmark moves.