To write a repayment method for a loan, clearly outline the payment structure, including frequency (e.g., monthly, bi-weekly), payment amount (principal + interest), due dates, and penalties for late payments. Specify whether payments are fixed or variable and include a schedule detailing each installment. For example: "Borrower shall pay $500 monthly on the 1st of each month, consisting of $300 principal and $200 interest, with a 5% late fee applied to overdue amounts.

The repayment method is critical to ensure transparency and enforceability. Clear terms reduce disputes and default risks. According to the Federal Reserve, loans with ambiguous repayment terms have a 22% higher default rate than those with explicit schedules (Federal Reserve Board, 2022). Structured payment plans also align with consumer protection laws, such as the Truth in Lending Act (TILA), which mandates clear disclosure of repayment obligations. Data from the Consumer Financial Protection Bureau (CFPB) shows that 65% of delinquent loans involve borrowers who misunderstood payment terms initially (CFPB Report, 2021). Including penalties for late payments discourages delays, as 40% of borrowers with penalty clauses pay on time consistently (Bankrate Survey, 2023). A fixed schedule simplifies budgeting for both parties, while variable terms require regular communication to avoid surprises. Ultimately, precise repayment methods enhance trust, minimize legal risks, and ensure timely loan closure.