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Financing Terms |
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Annual Percentage Rate |
(APR) the yearly amount or measure of interest that is charged to borrow money The annual percentage rate on his car loan is 6%. |
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Borrower |
a person who uses money or an item with the intention of returning it The borrower repaid the loan early and was able to eliminate two payments. |
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Capacity |
the ability to perform an action or task The bank wanted to know if she still had the capacity to make her loan payments since she had been laid off. |
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Car Title |
a legal document that indicates ownership on an automobile The bank held the car title until the loan was paid in full. |
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Collateral |
property or other assets provided to secure a loan He used his business as collateral for the loan. |
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Consumer |
one who purchases goods or services A smart consumer compares the price of products before making a purchase. |
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Equity |
the value of a property or asset minus the existing debt After 20 years of ownership, the couple had 60% equity in their house. |
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Finance charge |
the amount of money it will cost a borrower for interest and fees on a loan She compared the finance charge on two different loans to decide which one would cost less. |
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Financing |
the money obtained to fund the purchase of an asset such as a car or home Her parents applied for financing from the bank for an addition to their home. |
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Fixed Rate |
an amount of interest that remains the same during the entire loan period They opted for a fixed rate mortgage so they would know how much to budget each month for housing. |
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Installment |
payment on a loan that occurs on a regular basis Online banking made it easy to pay his monthly loan installment instantly with a click of the mouse. |
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Lender |
a person or business that provides money for a loan with the expectation of getting it back The lender offered a good annual percentage rate on the loan. |
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Loan |
money provided to a borrower that normally requires a promise of repayment of both the amount borrowed plus interest She had to take out a student loan to pay her college tuition. |
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Variable Rate |
a rate of interest that may go up or down during a loan period He took a risk by accepting a variable rate loan hoping that the payment would decrease and he would pay less. |
