With a term loan, you receive the full amount at closing and repay it on a set schedule, usually monthly and sometimes weekly or daily with online lenders. Each payment covers interest on the remaining balance plus some principal, so the balance reaches zero by the end of the term.
Banks, credit unions, SBA lenders and online lenders all offer term loans. Banks usually want tax returns and financial statements, while online lenders may decide mostly from bank statements.
Example: $100,000 at 12% over 36 months is $3,321.43 a month. The 36 payments total $119,571.48, so the interest cost is $19,571.48.
Because interest runs on the balance, paying a term loan early usually saves money unless the loan carries a prepayment penalty.