Type of rests

Meaning of rests

In case of a reducing balance interest rate calculation, the various repayments of the loan have to be taken into consideration for future interest workings. The time period after which the repayment is adjusted in the workings is called rest.

Monthly rest

There is a monthly rest whereby the interest calculation breaks each month’s EMI into the interest and the principal and then adjusts this figure immediately to get the reduced principal figure for the future interest calculation.

Quarterly rest

There can also be a situation where the repayment over the last three months is taken together for the purpose of interest calculation. In such a situation, the benefit of a lower principal amount for interest calculation will come after 3 months.

Annual rest

The repaid principal can also be adjusted after a period of one year and this method is called annual rest. Here, you have to wait for a longer time period to see the benefit of the repayments that you have made.

Careful analysis

It is very important for you to check the nature of interest calculation and also the type of rest that will be used for the purpose of your borrowing. This will help you in negotiating and understanding the situation better for your personal loan.