When people invest in an interest-accruing asset (like the ones on Percent), they do so with the hopes of receiving a payout. These payouts are known as disbursements.
Disbursements work differently based on the type of investment. Though there are other types of disbursements, including those in the business and legal worlds, we’ll specifically look at those regarding investments on Percent.
How Disbursements Work
When you invest in an amortizing investment, you receive disbursements of your principal and interest throughout the duration of your investment. The schedule of when you receive these disbursements is set by the amortization schedule of that specific note and made available to investors. In Percent’s case, this disbursement is made back to the balance of one’s Percent account.
When you invest in a bullet investment, you receive one disbursement of your principal and interest when the note reaches full maturity. This means investors must wait until the end of the deal to see all funds, but are still made aware of the interest they can accrue well before the initial investment.
Lastly, interest-only investments disburse interest payments throughout the duration of a note, just like amortizing investments. Yet like bullet investments, interest-only investments disburse principals when a note hits full maturity.
What Else Should I Know About Disbursement?
Each investment’s mechanism of disbursement (and thus investment type) is made clear to all investors before the initial investment. With Percent investments, this information is featured on our deal pages. We also include these details in our deal emails sent to Percent investors.
It’s worth noting that all investments come with some risk and no guarantee of returning your principal and interest. For instance, in the case of a default or event where the borrower cannot pay back principal and interest, an investor would receive no disbursement.
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