Short-Term Loan Terminology: “Finance Speak” Simplified

Applying for your short term loan but confused by all the finance-speak and jargon?

To help you better understand what it all means we’ve put together a comprehensive list of common terms and phrases, with some straightforward definitions in plain english.

Don’t see the word you’re looking for below? Leave us a comment below, keep it relevant of course, and we’ll add it to the list.

 

Annual percentage rate or APR

When we talk about an APR, we’re talking about the interest rate that’s charged to the borrower expressed as an annual rate. For a Nimble Small Loan of $2,000 or less, an APR doesn’t apply as these loans are fee based only. For more information see our FAQ.

 

Applicant

The person who is applying for the loan.

 

Direct debit

An arrangement setup to automatically transfer funds from your nominated bank account to a third party account (e.g. the Lender) , as a one-off or recurring  payment.

 

Bad credit

When we talk about bad credit, we’re referring to your credit history. This is also known as a “poor credit history” or a “black mark” against your credit file. It can be affected by a whole range of things including missed bill payments, defaulting on a loan or bankruptcy.

 

Borrower

A Borrower is the person who borrows money from a Lender and is responsible for repaying the loan.

 

Comparison Rate

The Comparison Rate reduces to a single percentage figure the interest rate plus most fees and charges relating to a loan. The comparison rate allows you to compare loans from different lenders to find out how much it will cost. But it is important to consider all of a loan’s features.

 

Credit contract

A document containing all the details of your loan, including the term, interest rate, fees, charges and repayments. This is also known as a loan contract.

 

Credit file

This is a file kept by credit reporting bodies that details your credit history. Lenders can access this information to help them decide whether to lend to you or not.

 

Credit guide

Anyone providing credit or credit assistance must give you a credit guide by law. Credit guides contain useful information about the lender, including license numbers, the lender’s complaints handling procedures and a description of the lender’s key obligations before entering into a credit contract with a borrower. The Nimble credit guide can be found here if you want to take a quick peek.

 

Credit rating

A rating based on your borrowing and repayment history which may be used by lenders to help work out whether you should or should not get credit. It is also known as a credit score.

 

Credit report

A credit report details your credit history, including a history of credit you have applied for, and any times you have defaulted on a payment.

 

Credit reporting body

A credit reporting body is an organisation that collects, holds, uses or discloses personal information about you for the purpose of providing an entity (such as a credit provider) with information about your creditworthiness. In Australia, the main credit reporting bodies include Dun & Bradstreet, Equifax and Experian.

 

Default listing

In Australia, if you’ve failed to make a payment under your loan contract within 60 days after the due date, then a default can be recorded on your credit report with a credit reporting body. This is known as a “default listing”. A default listing is different to an event of default.

 

Default fee

A fee you might be charged if you fail to make a repayment when it falls due. At Nimble, we believe in making things crystal clear. We’ll always show you the costs upfront, so there are no sneaky, hidden fees to worry about. Want to learn more? Check out our Fee Statement.

 

Dependant

A dependant generally refers to a person who relies on you for financial support.

 

Early repayment penalty

Some lenders will charge a penalty if you decide to pay off your loan early. Nimble does not charge an early repayment penalty.

 

Establishment fee

A one-off fee charged by a lender to cover the costs of the Lender setting up the loan.

 

Event of default

An event of default can occur when a borrower does not fulfil their obligations under a credit contract. Examples of events of default include not making payments on time, entering into bankruptcy and providing misleading or untrue information.

 

Fixed interest rate

This refers to when interest is charged at a fixed rate over the term of a loan.

 

Gross income

Your annual income before tax.

 

Interest rate

The proportion of a loan that is charged as interest to the Borrower, typically expressed as an annual percentage of the loan outstanding.

 

Lender

The bank, credit provider, financial institution or company who is giving you the loan.

 

Liability

Liability relates to the debt or money you owe on a loan or debt.

 

Loan

An amount of money you borrow from a Lender to assist with planned or unplanned events. Once a loan is accepted it then becomes a debt.

 

Minimum loan amount

This is the minimum amount that a Lender may offer you as a loan.

 

Maximum loan amount

The maximum amount that a Lender may offer you as a loan.

 

Minimum payment

The lowest amount that must be repaid by a certain date, which is often specified in your repayment schedule.

 

Net income

Your annual take home income after tax.

 

Personal loan

A personal loan is typically a loan obtained for predominantly personal, household or domestic use, such as buying a new car or going on a holiday. .

 

Principal

The principal amount is generally the original amount of money borrowed in a loan.

 

Product disclosure statement (PDS)

A PDS is a document that financial service providers provide when they offer or recommend a financial product to you. By law it must include the product’s key features, benefits, risks, commissions and a complaints handling procedure.

 

Repayment schedule

A repayment schedule details how and over what period of a time your loan must be repaid.

 

Secured loan

In a secured loan, the Borrower grants the Lender a security interest in an asset owned by the Borrower. If the Borrower defaults under the loan, the Lender may be able to exercise its security interest by selling the asset to help repay the loan.

 

Term

The period of time over which you must repay the loan.

 

Total amount repayable

The original amount you borrow plus all interest and fees. This is usually specified in your credit contract.

 

Transaction fee

Charges for transactions on your account. This includes things like, depositing funds, withdrawals and transfers.

 

Unsecured loan

A loan where there is no asset required to be used as security for your loan. Since personal loans are usually a smaller amount, they’re more likely to be unsecured.

 

Variable rate

This is an interest rate that can fluctuate during your loan repayment term.

 

 

You should read this bit: Sometimes we use links in our blogs that belong to a variety of websites and not Nimble, so clicking on, and using them, will take you away from Nimble’s website, meaning we’ve got no control or responsibility over the content. Nimble does not endorse and is not affiliated or associated in any way whatsoever to the businesses named in our blog posts. The information in our blog posts is general information only and does not take into account your objectives, financial situation or needs. The information contained in this blog is correct at the date of publication.

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