Our Jargon Buster
Jargon Buster: A-C | Jargon Buster: D-P | Jargon Buster: Q-Z
At Save My Bacon we try to keep our online short-term loan service as quick, simple and straight forward as possible. However, the financial world is full of jargon. To help you out a bit, Save My Bacon to the rescue (once again!) with our Jargon Buster.
Agreement
An Agreement is an arrangement or contract between at least two parties or individuals which regulates the terms of a loan. Signing a Loan Agreement holds the borrower responsible for keeping to the agreed arrangements for repaying the loan. Therefore, you should always consider the cost and the terms carefully before completing any offer of credit.
AIR
AIR stands for annual interest rate. This figure allows you to compare the cost of different loan products.
Arrangement fee
This is a fee the lender charges in order to cover administration costs.
Arrears
When a borrower’s loan repayments are overdue, he or she is classed as being in “arrears”. When this happens the borrower typically has trouble gaining further credit as the state of “arrears” affects his or her credit rating. Employees are also typically paid in arrears. This is because payday is at the end of a working week or month, during which an employee’s salary was being earned.
Bank
Banks are formal institutions where people, charities and businesses can invest or borrow money. Banks also offer several other services such as foreign currency exchange and insurance.
Bank loan
Bank loans can be for personal or business use. Personal bank loans are typically for sums over $1,000. The Bank would normally require the borrower to repay the money over a year or more. An application for a bank loan would normally require a meeting with your personal bank manager, plus a full credit check. Not all people are approved for a bank loan even if they have been customers with the bank for a long time.
Bridging Loan / Bridging Finance
This is a temporary loan advanced to help you buy a new property before you sell your existing one.
Budget
Creating and maintaining a budget is a great way to help you stay in control of your finances! A budget of your personal financial situation shows your income against your outgoings. By making a budget you can help ready yourself for a shortfall of cash, or work out how much you should have left over to spend or for a savings plan. See our Free Budget Service which links to a handy Budgeting Tool.
Cash advance
This is another term used to describe a cash loan (See cash loan below).
Cash Loan
A cash loan is money provided against a prearranged line of credit such as a loan agreement. The phrase might be used to describe a small loan made over a short period of time, compared to traditional bank loans which are usually taken for a year or more and can even be repaid over several decades in the case of mortgages. Save My Bacon provides cash loans.
Charges
This is the money paid to a financial institution for the services they provided you with. Financial Institutions can also apply penalty charges if their services are misused or their terms of use are broken. Penalty charges are such things as late payment fees, bounced cheques and unauthorised overdrafts.
Credit balance
This is the amount of money in your bank account when you are in the black (a “positive” balance).
Credit card
A credit card (plastic card like a debit card) allows you to borrow money up to your set credit limit in order to pay for goods and services from many companies around the world. Traditionally credit cards charge higher rates of interest than other forms of unsecured loans from banks.
Credit check
This is a check lenders can make via a credit reference agency (See below) as to your credit history.
Credit limit
A person’s credit limit is the maximum amount of money that he or she can borrow. Your credit limit is set by the particular lender who is making an offer of credit to you. At Save My Bacon you can borrow up to $500 credit limit. We work out how much you can borrow using our affordability calculations which take into account repayment amounts after fees have been added and the interest has been accumulated for the term of the loan compared to your normal income level.
Credit rating
A credit rating assesses how “credit worthy” you are. Credit ratings are also called credit scores and they help lenders decide whether they can lend money to you. Credit ratings are “scored” from a series of questions a lender asks about your financial history, current assets and liabilities. A credit rating is supposed to give the lender an indication of the probability of your being able to pay back a loan. Therefore, a bad credit rating would indicate a high risk of your defaulting on a loan. This would typically lead to the lender charging higher interest rates on the loan, or refusing the loan application.
Credit reference agency
A credit reference agency (called a credit bureau in the United States) is an organisation that collects and holds information about the credit history of individuals. It provides this information, typically in the form of a credit rating (see above) to lenders to help them assess how credit worthy and likely someone is to pay back a loan. Based on this information, lenders may refuse loan applications or charge higher interest rates. Examples of credit reference agencies in New Zealand are Veda Advantage and Dun and Bradstreet.
Credit report
This is a summary of your credit history. Organisations such as your bank and credit reference agencies collect the information required to produce a credit report. The information often contains your past borrowing behaviour, any previous loan applications, any court judgments, and whether you regularly default on mortgage and other bill payments. Credit reports are purchased by the lender to help assess your “credit worthiness”. You can apply for a copy of your own credit report from a credit reference agency.