Enhance your financial literacy with our new finance dictionary! Learn common financial terms and the definitions of economic jargon from our financial ABCs.
The annual percentage rate or annual rate charged for borrowing expressed as a percentage which represents the yearly cost of funds over the loan term.
An individual who receives funds that he or she has agreed to pay back is a borrower.
When you take out a loan, lenders often ask for collateral, which can be any major asset.
Not paying money owed on schedule is a default.
Early Pay Off
Repaying borrowed funds in full before its scheduled date is an early pay off.
A property purchased as a freehold gives the buyer complete ownership of the land and everything on it. This also gives the purchaser the right to do what they want with their property.
Someone who promises to pay back a loan if the actual borrower does not repay.
May refer to a period where a financial institution temporarily stops processing an application until the applicant performs some action, such as providing information.
The percentage of the principal that you pay for borrowing money, usually over a period of a year.
A bank account held in the names of two or more people (usually a couple) is a joint account.
This stands for knowledge-based authentication. It is a method of verifying an individual’s identity electronically by having them answer personal questions.
The ratio between the size of a mortgage and the mortgage lender’s valuation of the property is the loan-to-value.
A specific amount of money that is due every month is an individual’s monthly payment.
Net Asset Value
A way of calculating a fund's value by determining the current value of one share.
An overdraft is a deficit in a bank account caused by drawing more money than the account holds.
The total amount a lender has given to a borrower is a principal balance.
A quota is the limit set by a country’s government on the amount of a product or commodity that can be imported to or exported from that country.
The expected credit agreement to which the representative APR applies and which are expected to be entered into as a result of the promotion.
An individual savings account is a bank or building society account where the interest rate tends to be higher than current accounts.
Top-up is an extra amount of money that is added to an existing amount to create the total you need.
A loan where the borrower does not offer any possessions as collateral for the loan is considered unsecured.
Value Added Tax (VAT)
In the UK, VAT is a tax paid on most goods and services.
This refers to a loan application that is no longer under consideration.
Although not all lenders can offer extensions, this is a postponement of a loan’s due date.
The income from an investment is the yield.
Zero Per Cent Financing
A loan without interest is known as zero per cent financing.
1Perkins, A. (11 September 2013). Your financial ABCs. Retrieved 6 July 2015 from
2The Guardian. (26 November 2013). Glossary of business term – A to Z. Retrieved 6 July 2015 from
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