when consumers take out loans their lenders expect they will likely repay the debt interest is charged based on an agreed upon rate and payment schedule from when a loan is disbursed to when it s settled when making loans financial institutions forgo other investment opportunities that could offer returns the interest charges pay them for this opportunity cost and the risks associated with lending usually interest rates are presented as an annual percentage rate 
repayment schedules depend on the type of loan and the lender involved whether applying for or paying off a loan it s crucial to study the sections of the loan agreement outlining your options should you be unable to make scheduled payments borrowers who can t cover their loans may turn to bankruptcy protection however it would be best to explore this as a last resort since it will significantly affect your ability to take out loans in the future alternatives to this drastic step include refinancing the loan seeking help from debt relief companies or credit counseling agencies and directly negotiating with creditors when the unexpected happens and you must miss one or more payments it s often best to contact your lender before missed payments and fees escalate some lenders may even offer special terms for those facing hardship 1types of repaymentfrom covering education expenses to buying a new home or car achieving your financial goals often requires borrowing money each kind of loan has a specific purpose and has its own repayment terms auto loans for example usually have fixed interest rates and are designed to be paid back within a few years mortgages are long term commitments that can last several decades and may have variable interest rates student loans may have deferment options allowing borrowers to delay payments as they continue their education or are unemployed for an extended period 2