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Finance & Banking vocabulary · Loans & Credit

Grace period

Meaning in finance & banking, with examples

nounCommon term

In finance & banking, grace period means: A period at the start of a loan when the borrower does not have to repay principal, or extra time after a due date before penalties apply.

In Turkish: ödemesiz dönem, ek süre

How it is used

Used in investment, project and student loans and in card terms. A grace period on principal is common in investment loans, while interest may still be paid during it. Banks grant or extend a grace period. On credit cards, some writers use 'grace period' for the interest-free period.

Example sentences

  1. The investment loan has a seven-year term with a two-year grace period on principal.

  2. After the floods, the bank offered affected customers a three-month grace period.

Common collocations

  • grace period on principal
  • grant a grace period
  • two-year grace period
  • interest-only period
  • principalThe original amount of money borrowed or invested, not including interest. Each loan payment usually covers some interest and some principal.
  • installmentOne of a series of regular payments used to repay a loan or to pay for something bought on credit.
  • repaymentThe act of paying back money you have borrowed, or one of the regular amounts you pay to do this.
  • project financeLong-term financing for a large project, such as a power plant or motorway, in which the loan is repaid mainly from the project's own future cash flows.
  • due dateThe last day by which a bill, card statement or loan instalment must be paid to avoid late fees or extra interest.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Loans & Credit

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This page explains English vocabulary for learners. It is not financial advice.