Principal repayment can be structured in various ways depending on the terms agreed upon with the lender. Common structures include:
Amortizing Loans: These loans require regular payments that cover both the principal and interest. Examples include mortgages and auto loans. Bullet Repayment: The entire principal is repaid at the end of the loan term. This structure is often used in bonds and short-term loans. Balloon Loans: These loans involve smaller periodic payments with a large lump sum payment at the end of the term.