Glossary
Below we have compiled a list of terms which are used frequently in the finance industry. We have provided the definitions of these terms in order to better educate our visitors.
Annual Percentage Rate (APR) - The yearly cost of a loan, including interest, insurance, and the fees expressed as a percentage.
consolidation loan - A loan which combines all current debts and loans into one easy payment usually at a lower overall monthly payment.
credit score - A measure of credit risk calculated from a credit report using a standardised formula. Factors that can damage a credit score include late payments, absence of credit references, and unfavourable credit card use. Lenders may use a credit score to determine whether to provide a loan and what rate to charge.
default - Failure to make required debt payments on a timely basis or to comply with other conditions of an obligation or agreement.
finance company - A company which makes loans to individuals and/or businesses.
impaired credit - The result of a reduction in the credit rating of a borrower.
interest rate - Interest per year divided by principal amount, expressed as a percentage.
lender - A private, public or institutional entity which makes funds available to others to borrow.
lump sum - A single payment for the total amount due, as opposed to a series of periodic payments.
mortgage - A loan to finance the purchase of real estate, usually with specified payment periods and interest rates. The borrower (mortgagor) gives the lender (mortgagee) a lien on the property as collateral for the loan.
obligation - Any debt, written promise, or duty.
outstanding - Remaining, in existence. For debt, not yet paid. For securities, in the hands of investors.
repossession - The taking back of property by a lender or seller from the borrower or buyer, usually due to default.
secured loan - A loan that is backed by property. If the borrower does not repay the loan the lender may reposses the property.
unsecured loan - A loan that is not backed by property.
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