Finance and Financial Terms and Terminology.
If your like many, you don't always understand what people are talking about
when it comes to loans. Without understanding the basic terminology when
it comes to loans you just aren't setting yourself up right to make an educated
decision when it comes to applying for a loan. There are hundreds of terms;
Below are some of the most important:
Assets
Assets can be described as anything that holds value. Assets can be
all types of things from cars to houses. Assets can be used in helping
to build credit. For example if you are applying for a house loan,
you might use your car as an asset, to show that if you default on
a payment, that you have assets to fall back upon such as your car.
Capital
Capital can be a bit of tricky term as it can be used in several different
situations to do with finances. Capital can be described as the assets
that are available for use towards creating further assets; it can
also apply to the cash in reserve, savings, property, or goods.
Debt
is amount of money or something of value that is borrowed from a person
referred to as a debtor. Usually a debt that is borrowed will carry
some type of penalty along with the payback such as an interest, or
service.
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Debt Consolidation
Debt Consolidation is replacing multiple loans with a single loan that is
normally secured on property. This can often reduce your (the borrowers)
monthly outgoing interest payments by paying only one loan which is secured
on the property sometimes over a longer term. Because the loan is secured,
the interest rate will generally be considerably lower.
Equity
Equity is the difference between the value of a product (for example a house)
and the amount that is owed on it.
Liabilities
Liabilities refers to the sum of all outstanding debts in which a company
or individual owes to it's debtors.
Principal
Principal is used to describe the amount of money that is borrowed without
including any interest or additional fee's.
Term
Term refers to the length of a debt agreement. For example if you were to
take out a loan for a house over 10 years. 10 years would be the term.
About the Author
Ryan Fyfe is the owner and operator of Loans
Area . Which is a great web directory and information center on Loans
and related issues like Debt consolidation and Credit issues. |
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