pay day loans glossary image

A

Absolute Assignment – an act of transmitting all the rights for the life insurance policy from one person to another. All the perks and obligations that go along with the policy are shifted as well.

Accounts payable – the list of all the bills that haven’t been paid. The account payable liability is usually short termed (the term of the liability is shorter than a year).

Accounts receivable – the list of your debtors’ unpaid accounts. Usually, short termed accounts (up to 12 months) are counted as Accounts receivable.

Amortization – amortization allows to repay a fixed sum on a certain date each month, due to the certain timetable. Part of each payment goes as a refund of the principle and part refunds the rates.

APR (Annual Percentage Rate) – APR is the cost you have to pay for the loan taken over a year. APR consists of interest rates combined with all additional fees the borrower is charged with.

Appraised Value – appraised value is the monetary value of the house, cottage or flat. It’s calculated by the appraiser to help mortgage lender to set the size of the loan for the applicant. To define the appraised value, aspects as location of the estate, area, size, nearby infrastructure are taken into account.

Arbitrage –trading deal. A trader buys kind of asset and, at the same time sells it to the third party. Transactions can be performed at the same platform or at the different one. The point is that the cost difference between the prices goes as trader’s benefit.

Assessed Value – an equivalent that marks how much money your property worth. It is assigned to the property to define the size of taxes. As a rule assessed value is defined by the local administration or by the government.

Assets – anything in your ownership that has financial value and can be converted into money more or less easily. Any item, that can be turned into money to pay the debt counted as the part of assets.

Assignee – a person, or а company, the ownership of the rights, property or other assets are transferred to by the contract with the assignor.

Assignor – the person or company that is a participant of a deal. Assignor is a holder of the property, securities, or rights that are transferred by contract to the assignee.

Audit – audit is a process of checking up of the bills and papers of the company. The aim of inquiry is to define if the bills and tax reports are accurate and secure enough. Audit is usually performed by an independent third party, a person or a company.

Auto Insurance – is a kind of insurance policy. Designed to cover any expenses caused by the damage to the car or any kind of vehicle. Auto Insurance typically covers the cases of road accidents, the loss of the car as the result of hijacking and cases of the malfunctioning caused by natural disasters.

Auto Lease – is a kind of rent deal where a car or another vehicle is the object of rent. Auto Lease gives an opportunity to get a car for several years after paying part of the car’s price. The lessee is supposed to make repayments monthly for using a car. Term is usually up to five years. The car is to be returned when term is over.

Auto Loan – auto loan is a credit taken by the person, specifically to buy a car, new or used one. This kind of loan is secured with the car cost.

B

Bad Credit – the situation when a person or some business company could not repay the debt at some moment. This fact was fixed in the credit history, causing difficulties in getting future loans.

Bad Debt – a debt that a person or company cannot return to the creditor. Reasons can be like, a debtor’s bankruptcy or other financial circumstances. Bad debt also cannot be collected.

Bailout – if an organization or a company has difficulties with fulfilling obligations, their partners can help them with financial investments or loans. This kind of help called Bailout. It can be offered by the local administration or by the government.

Balance – the total sum that can be withdrawn from the bank account or a credit card. Consists of all money available including credit funds. Charges and service fees are not the part of balance.

Balance Sheet – is a documental presentation of the company’s financial state at the given moment of time. In the balance sheet are recorded all the businesses belongings (assets) and obligations (liabilities). Owner’s equity is also recorded.

Balloon payment – the big sum that is paid off at the end of the loan term. It is paid if the loan goes without amortization or is partially amortized. For example, a debtor can make repayments for the rates during the term of the loan. Then the principal is paid at the end. 

Bank – financial organization that got the license from the government and obtained the rights to offer financial services. The bank has the rights to collect and keep the deposits from population and give loans.

Bank statement – is a paper that lists all the info about the bank account. That is the current balance, the list of withdrawals and deposits.

Bank reconciliation – is a paper where the data from company’s balance sheet is compared with the data from the bank statement. Bank reconciliation aims at revealing the differences between the actual account balance and the balance reported in record books.

Benchmark – is a criterion or the pack of standards. In business, they are used to compare the effectiveness of securities with them.

Bill of sale – a paper where the act of trading deal is documented. All the details as cost, location, type of property, date are listed. In other word bill of sale documents the transition of the right to the property.

Break-even point – the period in manufacturing process where amount of expenses and gains are totally the same.

Budget – is a kind of financial plan for certain period. All supposed gains and fixed outgoes are counted in the budget.

C

Capital – all the money or any assets can be converted into money. Any resources that can be invested into manufacturing.

Cash – money that an individual has on hand and ready for use.

Cash Advance – the type of credit funds that a user can take from the credit card when out of money. The service is also available for non-card holders in bank office. Credit card cash advance is limited to certain measures. The similar service is offered to people by commercial lenders. Interest rates for cash advances are high whether you use credit card or lenders’ offers.

Charge Off – a debt that reckoned to be non-collectable by a bank or a lender. А debt becomes a charge off when a debtor misses several payments in a row. After that a creditor stops trying to collect payments and charges it off.

Checking Account – an account in the bank that is currently active and allows unlimited number of depositing and withdrawing transactions.

Collateral – a kind of item that is given to the creditor as a guarantee that the borrowed money will be returned. Any valuable piece of property can be used as Collateral.

Collection Agency – is a firm that helps a lender to get repayments of the loan from a borrower who failed to repay in time. A collection agency can be a third party. But some banks have a special department in their structure.

Compound Interest – is a financial method of interest calculation where the basis for calculations is the loan or deposit principal and the rates combined. Hence, the longer the life of the loan is, the higher the rates.

Credit – credit is a kind of financial or business arrangement. A client who gets credit can use a service or item purchased before the payment is made.

Creditor – is a person or agency you borrow money from.

Credit Bureau – is a company which searches and gathers all the data about consumer credit history. This data is documented then as a credit report. Credit report is then handed to a lender who has ordered it. Credit bureau also counts individuals’ credit scores.

Credit Cards – small card made of plastic which is preceded by the bank. The card allows its owner to use certain amount of money borrowed from the bank. Cardholder can buy items or services with the help of card. The borrowed funds supposed to be returned along with the rates.

Credit Check – a checkup of the client’s or company’s credit history by a potential lender. The process aims to find out the odds that a loan will be repaid due to obligations.

Credit Counseling – sometimes is called the Debt Counseling is a special financial assistance. If a debtor has difficulties with paying the debt off credit counseling helps to find the ways out. The tools offered can be financial education, budget planning and others.

Credit History – the full list of all individual debts and the repayments made to return them. It shows the potential creditor what the chances that a borrower will be responsible are.

Credit Limit – is the climax sum that a borrower can get from the bank or other financial agency as rented funds.

Credit Report – the information about your financial past collected by a credit bureau. Including the data about your credit limits, the number of loans and frequency of timely payments.

Credit Score – the grade that shows how responsible you’re as a borrower. The lowest score possible is 350 and the highest is 800. The higher the scores the better your borrowing reputation is.

Credit Union – is a financial organization uniting certain group of people. Credit union can consist of people of ethnic group, or colleagues, or students and stuff of one university. Organization is owned by its members and offers them different financial services.

Creditworthiness – defines individual financial stability and ability to manage their finance and debts.

Current asset – real money and any other reserves that can and expected to be turned into money in a year.

Current liability – any financial obligation that are expected to be fulfilled in a year.

D

Debit – any kind of financial operation making the amount on your checking account or card smaller.

Debt – the sum you rented from a person or organization that is expected to be returned. Money can be borrowed for different purposes. Mostly, debt is returned with the rates added to the initial amount.

Debt Avalanche – the popular scheme of repayment for those having several loans. You are supposed to make small repayment on every loan you have. But the biggest repayment goes to the loan with the greatest APR. Hence, the loan with the highest APR is going to be paid off first.

Debt Consolidation – generally speaking, the debt consolidation is a situation when you take one big loan to repay several smaller ones. It’s also possible to get a new credit card for this purpose.

Debt Settlement – a negotiation between a creditor and the borrower that resulted in reducing the size of the debt. The process takes place when a debtor cannot afford to repay the debt fully.

Debt Snowball – a strategy of repayment for multiple loans. Some payments are made for every loan monthly, but the main aim is to pay off the one with the smallest principle.

Debt Trap – conditions in which a debtor is forced by circumstances to renew the loan or get a new one. This way it looks like an endless wheel.

Debtor – a person or company that borrows money from the creditor. Debtor is obliged to return the debt on a certain date. It’s also possible to return funds part by part on agreed schedule.

Default – if a person cannot pay the loan they took, they default on the loan. You can default on any obligation you have by contracts, deals or laws.

Deficit – deficit happens when the assets owned by a firm or person are not enough to pay debts. If the expenses are bigger than revenues, there is a deficit in the budget.

Deflation – is a process of reduction of prices and, at the same time an increase of money value.

Depreciation – the reduction of the assets’ value is called Depreciation. The process of assets’ value compensation is called the same way.

Direct Deposit – a scheme in which the funds are loaded directly on beneficiary account with the help of electronic system.

Direct Loan – funds given to a borrower directly from the lender. Anny go-betweens are eliminated from the arrangement.

Discount – the decrease of the price for an item or service.

Dividend – a part of company’s income that goes to the shareholders.

Down Payment – certain sum that is paid as a first payment for the purchase of high cost. The down payment is an affirmation of the deal. The rest of the sum is usually paid off according to the arranged schedule.

Drawings – are funds that are pulled out from the company balance for owner’s personal purposes.

Due Date Rate – is the sum that includes the principle with all charges. This amount should be returned to creditor by date when the debt must be completely paid off. Due day rate is set by the agreement of the creditor and the debtor.

E

Employee share schemes – schemes that allows distributing part of company’s shares among the employees. The shares can be paid by the company. Another option is to offer the shares to employees on a reduced cost.

Encumbered assets – a piece of property that’s owned by person or a company having an unpaid debt. If a debtor fails to pay, creditor has the right to make a legal claim on the property. Hence, encumbered asset is a kind of Collateral.

Equity – is what remains from the company’s capital if the total size of liabilities is taken out from summed up assets. If the company has a single owner, when the obligations are fulfilled, the remaining equity belongs to the owner. If there’re shareholders each of them has a part of equity.

Equity finance – the financing system in which the investor gives money to the company and gets shares for this.

Expenses – the funds or other resources that a person needs to spend to make a purchase or get a service. The resources you need to use to gain some profit.

Exchange Rate – exchange rate is the monetary worth of the national currency in comparison with the currency of another state or country.

Expense Ratio – the part of the company’s income that is spent on internal needs. For example, operating expenses, fees and charges. Usually, this ratio is around 1-2%.

Expiry Date – expiry date is the date on which a deal, or a contract stops being valid or active. A credit card also has an expiry date after which a cardholder should get a new one.

F

Facility – any mechanism offered by a firm or financial institution that helps a client to build the benefits up with more effectiveness.

Fair Trade Price – the lowest cost possible that is paid to farmers from the developing countries for the goods they produce.

FICO Score – the scale of credit scores assigned to a potential borrower to define his or her probable ability to repay the debt. FICO scores are attributed to a debtor basing on his or her credit report. The higher scores indicate a responsible debtor who will likely repay the loan in time.

Finance Charges – that is any charge which is attached to the loan, any additional money a debtor is obliged to pay. In other words all the money a creditor gets from the loan in addition to the principle.

Fixed asset – a piece of property in the company’s ownership that is used to make income. Fixed asset cannot be converted into money quickly.

Fixed Expenses – are the expenses that stay the same during some long period of time. Fixed expenses do not change under the influence of production output or sales effectiveness. For example, the regular repayments on the loan go as fixed expenses.

Fixed Rate – fixed interest rate does not change during the life of the loan. This means that the sum a debtor spends on repayments will be the same. In some cases fixed rates are applied only for a part of the loan term.

Forecast – all financial operations that are expected to be performed in the nearest future. Detailed forecast includes a list of actions necessary to generate profits and supposed expenses as well.

Foreclosure – the result of client default on the mortgage. If a borrower cannot make repayments for the house, mortgage lender repossesses it. A debtor has some time of redemption to repay and get the property back. Unless it is done, the lender sells the property out.

Fully Drawn Advance – is a kind of loan for companies or small business. A borrower gets an opportunity to get a big sum at once. The usual term for fully drawn advance is 15 years. The interest can be fixed or flexible up to debtor decision.

G

Good Credit – is your nice borrower’s reputation. It is based on high FICO scores assigned to you by a credit bureau. To get a good credit one should apply for a loan only when it is absolutely necessary. Another step to a good credit is making payments according to schedule. Usually, scores from 600 to 850 are counted as good credit.

Grace Period – is a term after a loan due date, during which you are safe from the penalty. Meaning, if you cannot pay on time for some reason, you still have some time to make payment. During this period you will not be charged for the late transaction. Typically, the term lasts up to two weeks.

The period of time when the rates for the loan do not accrue, or they are significantly lower can be also referred as the grace period.

Grant – kind of financial support provided by the government or commercial organizations. Grant should be spent on defined purpose. The receiver doesn’t have to return it, i.e. it is not a debt. There are grants for students, authors, business startups and scientific researchers. As a rule, an applicant should explain why they are the best candidate for the money. A plan of the grant distribution should be often presented as well.

Gross Domestic Product – defines how much income the country got from all the goods and items produced during a financial year.

Gross income – the total sum of money the company has made on the operation or during certain term. The gross income is the income you have before charges, expenses and taxes are withdrawn.

Gross profit – to get the gross profit you should first calculate the cost of the manufacturing goods or service performance. Then calculate the income you get from sale. Deduct the manufacturing cost from the revenues. The sum you have after deduction is gross profit.

Guarantor – is a person who has your back in fulfilling a loan agreement. Guarantor promises the creditor that a debtor will repay the loan fully. A guarantor shares the responsibility with the debtor. If debtor cannot repay, guarantor pays for him and returns the debt from his or her own pocket.

H

Hard Credit Check – is a close examination of your credit past by a lender company. The lender will get complete information on your credit report as a result of hard credit check. Each hard credit check becomes a part of your credit report. This kind of check can and, probably will reduce your credit scores by a couple of points. Hard credit check helps a lender to decide if it’s safe to work with a borrower.

Hire-purchase – an operation where a client byes something and pays only a part of the price. The rest is paid during some period with equal repayments. Hence, after the first payment an individual can use the said object. It’s kind of rent. But the right of the ownership is transferred to the user after the last payment. Interests, by the way, are added to each payment.

Home Equity Loan – it’s a loan secured with your house. You can get a big loan using your house as a guarantee of repayment. If the loan cannot be repaid, a creditor can make a legal claim for the building, and then sell it. Home equity loan is a popular way to find money for business start.

Home Loan – is a targeted loan that is advanced to an individual who wants to buy a place to live in. This kind of the loan is also called mortgage. The term of the home loan can vary from 10 to30 years. Mortgage is usually secured by the house in question.

I

Indemnity – is a kind of financial protection guarantied in business contract or insurance policy. It is a sum that indemnitee gets from indemnitor in case of loses of capital or property. For example, insurance companies pay Indemnity if damage happens to the clients’ property or health.

Indirect Tax –is a tax that a manufacturer or a seller must pay to the state. This tax is included into products’ price in the first place. It makes the price higher as a buyer has to pay both the price and the tax.

Initial public offering (IPO) – in business IPO is when company is selling part of the shares for the first time. Hence, people who are not members of the corporation, get a chance to become shareholders.

Insolvent – in simple words, insolvent means that an individual or a company doesn’t have enough funds or assets to pay all the debts. If a company is insolvent the person in charge is obliged by law to stop making deals and buy materials. Being insolvent often Leeds to claiming bankruptcy.

Installment Loan – is a loan which you got, topically for term longer than half a year. And then you repay both the loan itself plus the rates according to a fixed schedule. Meaning; each month the sum determined in loan agreement must be paid on defined date.

Insufficient Funds – a case when the bank account is empty. Due to this fact a creditor cannot get repayment on the loan in full. The sum is also can be smaller than is necessary to make payment

Interest – is a sum that a borrower pays for the fact of borrowing and using lender’s money. When the loan is returned, interest should be added to the sum borrowed. In fact, interest is exactly what helps lender to gain money from the loan. When you load money into account to keep them in the bank, you gain rates as well.

Interest Rate – when you borrow money, a certain amount of funds is obligatory to pay above the borrowed. It’s a defined portion of your principal, measured in percent. Interest rate can be fixed or flexible. Strictly speaking, it is what you pay to the lender for the fact of lending money.

Investment – it is when you contribute money into business, or purchase some assets. The point is that when you invest money you expect this action will gain you more money than you spent. Most investments are made for long prospect.

Investment Risk – there is always a possibility that the benefits from the investment will not be as high as you expect. There are also chances that you will gain less than you invested. And you can gain nothing at all from the investment. These probabilities are known as investment risks.

IRS – there is the Department of Treasure in the system of the United States Federal government. It consists of several departments or agencies. Internal Revenue Service or IRS in short is one of them. IRS’ field of activity is federal taxation. They introduce tax laws and collect taxes from population’s income. They deal with pension plans, as well. In fact, IRS provides the state with regular income inflow.

L

Lender – any person or company that rent you funds you need. The borrower is, usually obliged to return the debt in accordance with credit agreement. As a rule, borrower should pay back the money lender gave him or her and the rates.

Liability – any debt someone should pay or any financial obligation a person should fulfill. Any expenses are counted as liabilities.

Lien – is the power a creditor has over the mortgage house or other loan collateral. In short, lien is the creditor right to sell the property the debtor bought with the loan money. The creditor can, as well, repossess the property or equipment and use it to cover the loan without selling it.

Line of Credit – getting a credit card you make an agreement with the bank. According to this agreement, you as a card holder, can use a certain sum that bank is ready to lend you. This amount of money is your line of credit, or credit line. The better your credit history is, the more flexible is your credit line. Note that you pay rates only for money you use.

Liquid Asset – any item or shares an owner can sell in very short time without difficulties.

Liquidate – to sell property, or securities or any other assets to get real money.

Liquidation – the process of converting assets into money by selling them out. Also, liquidation is a process of selling out a firm that has no money to cover all liabilities.

Liquidity – the characteristic feature of an asset. Defines how fast an owner can sell the asset and get money for this.

Liquidity Trap – is a type of economic conditions, which are formed by external circumstances. In liquidity trap, the interest rates are extremely low. So that reducing them further is economically ineffective. In this case people find it unprofitable to save money on the bank accounts or invest them into shares. They prefer to keep money in cash. So, it doesn’t matter, how much money the state releases. Released banknotes can’t have a significant impact on the economy because of staying in people’s pockets.

Loan Fee – all the charges that the loan is accompanied by. In fact, loan fees are money a client should pay for using the loan as a service. Interest rates, meanwhile, are not fees, they are completely separate charges. Remember that different loans are associated with different fees. Beside this, fees for the same loans differ from organization to organization. Calculate the loan APR to know, how much the loan with all fees and rates will cost you in certain bank.

Loan Forgiveness – is the situation when a lender and a borrower make an agreement. According to it the borrower do not need to make repayments on the loan anymore. In other words, the debt is written-off. The creditor can forgive the whole loan or just a part of it. The reasons for loan forgiveness can be different. On federal level there is a Student Loan Forgiveness. There are also several programmers people can enroll in, and apply for student loan forgiveness.

Loan to value ratio (LVR) – it is a proportion between two figures. The first is the market value of the item you plan to buy with the loaned money. The second is the size of the supposed loan. To learn LVR, they divide the loan sum by market value. It lets the lender to suppose, whether they can cover the expenses by selling the item out in case the borrower cannot repay the loan. The LVR is used with mortgage loans typically.

M

Margin loan – is a situation when a borrower take money from the lender, specifically to buy shares. Margin loan also can be invested into some other types of assets. Most often, an investment should be approved by the lender. Borrower’s assets serve as security for the loan.

Market Value – it is the biggest possible amount of money you can get for asset you offer at the open market.

Markdown – the decrease in the price of the goods or service. Usually, aims to attract potential clients or sell the goods out.

Maturity date – is a date prescribed in the loan agreement when the loan should be paid off fully. Normally, if no events beyond debtor’s control happen during the loan life term, Maturity date – is the day when the last repayment is made.

Microloan – strictly speaking, a microloan is a small sum of money that a small business owner borrows to cover business needs. Microloans are designed to help startups and developing companies. Interest rates for microloans are not that high. But, in fact, this type of borrowing is quite open and a self-employed on can access it too. In the United States the lower threshold for microloans is $500.

Minimum Payment – the smallest sum a debtor should repay monthly for the loan. You also can calculate Minimum payments for your credit card. Making minimum payments on time will let you prevent penalties if you cannot make the repayment in full.

Mitigation – in other word the mitigation is the reduction of the possible risks of loses. It is used in insurance business and in other spheres as well. To mitigate the possible damages in the process of fulfilling obligations, the contract should be as detailed as it can be. In this case the most risks possible will be taken into the account. And the steps of the parties towards mitigation will be set.

Monopoly – a state at the market of goods or services, in which a producing company has no competitors. Hence, the customer has no options where to go to get the product. Monopoly allows the seller to set high price on the product. The reasons for the monopoly to form can be different. For example, the said seller or manufacturer can be the only one who has access to certain resources. Or the company can be the only one patent holder of the technology. In some cases the government can be a monopolist in one or several manufacturing areas.

Mortgage – is an allowance that an individual gets from the lender with one, definite purpose. And the purpose is to buy a place to live. Usually, mortgage is 80% of the market value of the house at stake. That means; a person should have another 20% to make the first payment. The life of the mortgage loan can be as long as 50 years, but 30 years long loans are the most popular. Note that the house itself is a loan collateral. So is you fail to make repayments, the lender has the right to get you out of the house.

N

Net assets – these are, literally, the same as the net worth or Equity. The assets you have on the balance after all liabilities are paid off.

Net income – is what remains from the income you earned, after all the debts, obligations and taxes are paid off. Net income is also known as net profit.

No Credit Check Loan – is a type of loan which a borrower can get without hard check of his or her credit report. Hard credit check which means a lender will have the full data about you credit past won’t happen. Instead of hard check, the lender will apply a soft credit check to have a brief review of your financial behavior. No credit check loans – is a chance to amend troubled credit history, though the rates on them are typically high.

Non-Performing Assets – if borrower hasn’t made any repayments for the loan within 90 days the bank defines the loan as non-performing asset. When this happens the said loan stops generating money for the creditor. So, the bank can pass it to the collecting agency.

NSF Fees – the full for NSF fees is ‘Non-Sufficient Funds Fees’. It’s a contribution that the bank charges on you if you try to withdraw or transfer more money, than you have. NSF penalty applies as well, if someone tries to cash you check and the amount of funds in your account is not enough.

O

Online Loan – is a loan that you can apply for and get without visiting the bank office. You can use the web and the lender’s site. All the process of setting the sum, filling an application and so on, occurs on the internet. It is a popular way, to get payday loan or another short-term loan.

Open End Mortgage – it is a mortgage that allows a debtor borrowing more money from his or her mortgage lender. You can reborrow before you pay you mortgage off. The new loan is secured by your home, as well as the initial mortgage. The lender will add this new principal to the unpaid part of the first principal. For example, if the size of your loan was $75 000 but you took only $30 000, the rest $45 000 are waiting for you. The rates of the loan is 4%, let’s say. After 5 years, you paid $10 000 of that initial $30 000. Now you owe $20 000. You can now take a part of $45 000 that is waiting for you. You do so, taking $12 000. That means, your new principal is now $32 000 and the rates stay the same 4%.

Origination Fee – the origination fee occurs if the creditor approves your loan application. When this happens the lender charges the debtor with different commissions. Origination fee is one of them and, it is a kind of contribution the creditor has for handling the loan process. Generally speaking, the borrower pays for the fact, the lender took the trouble to check, his or her credit responsibility.

Overdraft facility – it’s an agreement that a client set with the financial institution to have an opportunity to use the overdraft protection.

Overdraft Fees – there are two types of overdraft fees. The first one took place when you try to take too much money from your account or a credit card. As you need the funds larger than you have, an overdraft occurs. And the bank just cover it, letting you have the sum you need. Later, you return the debt that equals this covered overdraft.

The second type occurs when you try to cash a check, or someone else tries to cash a check from you, but the money on your account is not enough. In this case, the bank returns the bad check unpaid and you got a penalty.

Overdraft Protection – is a service that most bank offer to their clients. Overdraft protection allows you to do a withdrawal or another operation, even though you don’t have enough money on the account. Overdraft Protection can be performed in several ways. The first option possible is; the bank covers an overdraft, up to a certain limits, using its own resources. The client just returns the money in the future. Second option is to link you credit card and the saving account, if there is one. Then possible overdraft is covered with your own money. And you charged on with fees for using this service. The third option is to link two credit cards. So, if the first one is maxed out, the bank transfers money from another, automatically.

Overdrawn account – overdrawn account it’s an account that has negative balance. Overdrawn account is more than just empty. The account holder spent more than they have had. So, now there is a debt to the bank. In some banks there are fees for negative accounts, These fees can be fixed, or can accumulate daily, for each day of having negative balance.

P

Pawn Shops – Pawn shops are financial institutions that offer small dollar loans to population. To get loan in a pawnshop, a debtor must give something valuable as collateral. After the debt is paid off, the client gets his or her property back. If the borrower cannot pay the debt, the creditor gets the right to sell the collateral. Loans that pawn shops offer are always short termed and with very high rates.

Payday Loans – payday loan is a small loan that a borrower gets until his or her next payday. Typical term for the payday loan is two weeks. In very rare cases you can get a payday loan for a month. On payday, you should return the principal and the rates which are sky-high. In some states payday loans are illegal.

Peer to Peer Lending – Peer to Peer lending is the system that allows getting a loan from a person, not from financial organization. Strictly speaking, if you have ever borrowed money from a friend you’ve experienced peer-to-peer lending. Nowadays, you can find peers to lend from online. You can meet also the terms ‘person-to-person lending’ or ‘P2P’.

Personal Debt – personal debt is any financial liability that an individual or a family made and have to pay off. Any debt made by a private citizen, not a state or corporation is personal debt.

Personal Loan Agreement – personal loan agreement is a kind of contract used in P2P lending. This contract documents the fact that a debtor made a personal loan and took the money from the creditor. The details like the sum, the date of borrowing, the rates and the due date are also mentioned.

Personal property – is any piece of property that is not associated with land. Personal property is the kind of property, an owner can move easily. Meaning: houses and lands are not included into the notion. But anything you can carry or move, are personal properties. It can range from your car or other vehicle, to your clothing or pets. Money, shares and securities are personal properties as well.

Predatory Lenders – are lenders who use very strict and unfair policy to borrowers. Usually this policy includes short terms, highest APR possible and a lot of fees, charges and penalties.

Prepayment Penalties – if the debtor pays the debt off before the maturity date comes, he got a penalty from the lender. The lenders do this because the rates are the source of lenders’ income. The longer the term is the more profitable the loan is for the creditor. If a client pays off before the maturity date, the lenders consider this the loss of profit.

Prime Rate – the prime rate is the best, most profitable rate, the bank can offer to the most responsible clients. The lender calculates the interest rate for you grounding on your credit score. The higher the score is, the lower the rate. Clients with the perfect reputation get the prime rate as the bank feel safe lending them money.

Principal – when you borrowed money, the exact amount that the lender give you, is called a principal.

Private Loans – a loan that you get from an organization that is not a part of federal banking system. Any non-governmental banks or credit unions give private loans.

Profit – the term applied to the money you get, minus all the expenses. Profit is also the benefit you have when your business generates more money than you spent to make it work.

Property Tax – a tax government contribute from individuals for owning real estates or personal properties of value.

Proportional Tax – is the system of income taxation where the size of the tax imposed is not flexible. This mean that each taxpayer pays the same tax and the size of the income do not influence the tax.

R

Receipts – a paper that verifies the fact that a customer has made a purchase and has paid for it.

Refinance – refinance is, in other words, to take a loan with the purpose to repay loans you already have.

Refinancing – the process of replacing the old loan with the new one. This new loan is taken with several purposes. First is to repay old loan, second is to get more comfortable and beneficial terms and rates. Third is to improve credit scores in general.

Regressive Tax – the system of taxation which imposes lager taxes for people with small incomes in comparison with those with high income.

Repossess – to obtain legal rights for the collateral of an unpaid loan.

Repossession – Repossession happens when the rights of ownership of the collateral go to the creditor. This happens if the debtor cannot repay the debt secured with the said collateral in time.

Revenue – the income that you get in total. Revenue is calculated without taking into account all the future pullouts necessary to pay for liabilities.

Reverse Mortgage – is a loan that gives people older than 62 to get money against their home price. It works in the following way; first, the market value of the home should be estimated. Then a homeowner makes an agreement with the lender. And then the lender pays to the homeowner. The borrower do not make repayments, the debt accumulates. When the owner dies, the lender sells the house out, to cover the expenses. If the owner decides to move out, the lender will sell the house as veil, and took the part of the money, to cover the principal and rates of the reversed mortgage. The rest go to the ex-homeowner.

Risk – the possibility that an investment will not generate benefits or generate less profit than an investor expects.

Rollover – to roll the loan over means to postpone the maturity date of the loan. Most lenders offer this option that will cost additional fees.

S

Savings Account – saving account is a kind of account in the bank where account holder can load money. The said funds stay on the account, accumulating rates for the account holder.

Second Mortgage – is a mortgage that an individual takes, despite he or she has already took one earlier. The real estate securing the second mortgage is used to secure the second one as well.

Secured Credit Card – a credit card that is tied up to the account where a customer keeps savings. The bank can pull the funds out from this account if the client cannot make payments.

Secured Loan – is a loan that a borrower can get after providing some personal property or other asset as collateral. 

Security – is a piece of property offered to lender as collateral for the loan.

Service Charges – a contribution that a client pays to the bank for the fact performing services.

Soft Credit Check – is a mild way to get the information from the borrower’s credit report. Soft credit check does not demand client’s permission. Soft credit check will not have impact on client’s credit scores. In general, a creditor can get just a brief review with a soft check.

Soft Loan – soft loan is a loan with more comfortable conditions. These can include lower or more flexible rates, schedule of repayment and so on.

Stock – all the items and products that a seller has at particular moment to sell.

Student Loans – student loan is the loan an individual get to pay for the college or university studies. There are several federal programs for a student to be, to get a loan. They can also choose one of private student loans. As most of the students are young and don’t have credit reputation, student loans require the participation of the guarantor.

Subprime Lending – subprime lending is the special niche of the lending business. Subprime lenders are ready to take the risks and offer loans to people with bad credit history.

Subsidy – in short, it is a financial help that a company, a firm or an industrial sector get from the state. Some types of the subsidies are accessible for citizens too.

T

Tax Refund – is what you get from the IRS if you pay more taxes than you, actually, owe to the state. If this happens, the IRS returns the extra money paid to the payer. Most often tax refund occurs to the money paid as withholding tax. Sometimes, amount of money, that IRS takes from you as withholding tax during the year is bigger than you actually owed. They can refund it after considering an application from you.

Tax Relief – any projects and schemes that let a taxpayer legally cut the tax expenses. There are different opportunities of such cut for individuals and for corporations, as well. The programs of tax relief differ from state to state. There are possibilities to pay less, or to take a break on payments. There are also schemes that allow defining some sources of income or types of assets as non-taxable.

Taxes – a kind of contribution that government has from any income, goods, service or manufacture. Taxes can be different in different states. They are also different for individuals and agencies. But in general, taxes are in the list of main sources of the state income. Public services, transportation, social security and many other things are funded from taxes.

Term – the time limit during which a loan, a contract, a credit card is active, valid, and can be legally used. Term also has the same meaning as the word ‘condition’. The set of demands and rights of the parties of the contract can be called ‘Terms’ in short.

Title Loans – in general, title loans are loans where a borrower needs to provide a material object of value. This item assures the lender that he will get the money back. Hence, title loans are secured with Collateral. Speaking of title loans, the debtor car title is used as a security. Usually, this type of loan is short-termed and goes with high rates.

U

Unearned Income – any money an individual get from the sources other than his or her salary. That can be profitable investments, the rates from saving deposit. Even a money gift is a kind of unearned income. Important reminder: most of unearned income are also taxable.

Unemployment Trap – a position when a jobless person does not try to find a job. This happens when staying unemployed is beneficial enough. The situation is typical for the countries where social security institution is highly developed and unemployment allowances are high.

Underlying Asset – in financial world, underlying asset is any asset that is used to make a contract between firms or individuals. The contract is a derivative. And the cost of underlying asset is the ground to calculate the price of derivative. For example: you have a shop which sells bikes. You contract the delivery of 100 new bikes to the client. The contract itself – is a derivative. The price of these 100 new bikes is underlying asset for the contract.

Unsecured loan – is a type of loan you can get without providing any collateral to the lender.

V

Variable Expenses – the expenses that are somewhat unpredictable. They can change from week to week and from month to month. The quantity and the cost of variable expenses depend on what goods you bye. Variable expenses are not about ability of not buying or using something. It’s about the amount of money spent. For example, on week you can spend $100 to fill the tank of your car. But next week it can be just $30. This expense is variable.

Variable Rate – the rates on the loan or a deposit that are not fixed. Variable Rates can change and become higher or lower under the influence of economic conditions.

Volatility – to put it simply, volatility is the difference between the highest and the lowest prices of the asset. Volatility itself can be low or high. You can calculate the volatility for any item at the market. Volatility is measured in percent. To calculate the volatility correctly, you should define some time limits. If the volatility equals a percent or two you can say it’s low. The rate over 10% goes as high volatility.

W

Wage Drift – is the amount of money that a worker gets over the agreed salary, or average salary in the region or state. All unplanned money like commissions, shares and rewards, payments for overtime shifts make a wage drift.

Wage Garnishment – an instrument through which you creditor can get access to your monthly income. Wage garnishment allows pulling out the money, directly from your bank account. Important is that to do so, and collect unpaid debt applying wage garnishment, the debtor should make a legal claim to the court and win the case. And still, no one can legally take more than 25% of the individual’s salary or other income.

Withdrawal – withdrawal is the process of taking money from your bank account or credit card. You can withdraw funds with the help of ATM or in the office. A withdrawal through electronic system is also possible.

Working capital – all the assets and liabilities that a company can use to generate money in everyday life. In short, working capital is all the money the business can operate with.

Y

Yield – is the income an investor gains during a financial year from securities or shares owned. Yield is measured in percent.

 

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