The interest rate shown when you make an investment at Trine is annual interest. However, how the interest and repayments of capital evolve over time depends on whether it is an amortising or a non-amortising loan.
If the loan repayment structure is an amortising loan, the first repayment is typically 3-6 months after the loan has been transferred to the borrower. This is due to the grace period offered by Trine in order to ensure that the assets financed are able to service debt given the lead time for invoicing and payments to be made. During this period, only interest is charged. Thereafter, repayments of capital occur regularly.
Amortising vs non-amortising loans
There are two forms of loan structures which are determined by the borrowers financial requirements, cash flows and business model. We refer to them as amortising and non-amortising loans.
For an amortising loan the borrower is required to make equal periodic payments of the principal amount to allow the initial investment to reduce over time. In an non-amortising loan, the principal amount is paid off at the end of the loan period in a bullet repayment. There are also cases where borrowers pay off a smaller amount of principal on a regular basis and have a bullet repayment at the end of the loan period.
In an amortising loan the borrower only pays interest on the outstanding principal amount they borrow at any given time, similar to how you would amortise a loan on your house - by paying off the principal you also reduce the amount of interest you pay over time. For a non-amortising loan, the borrower pays annual interest on the total loan amount.
What does this mean for investors?
In an amortising loan you as an investor will get recurring capital and interest repayments throughout the entire loan period. In a non-amortising loan you will get recurring interest repayments, but the full principal amount will be repaid by the end of the loan period.
An expected repayment schedule can always be found in the loan contract as well as in your dashboard when you’re logged in. As you receive payments from the loan into your Trine account you can choose to reinvest the money or withdraw.
Please note that all investments are subject to risk and repayments are not guaranteed.