Term Loan

Term. As in: periodic. A set period of time, like the way that bad decisions by U.S. presidents are limited, in that they can only hold office for 2 terms of 4 years each. That way, the stupidity is spread around more broadly.

Term loans follow the same patterning. You borrow $22,000 to buy a car from Smilin' Sam's Sybaritic Subaru, and you pay it off in 5 years, or 60 payments of about 500 bucks each (interest gets bundled in there as well).

So why is it even a Thing to have the term concept in a loan? Well, by "reminding" borrowers every month that they owe something, it keeps them focused on reserving enough cash to make good on their promise in borrowing the money. And, over time, as the debts owed decline, the risk mitigates on both sides of the handshake.

Term loan. Very different from a tern loan. Those birds never pay back the fish they "borrow." Jerks.

See: Zero Coupon Bonds.