Financial Glossary
Deciphering credit card statements, tax forms and other financial documents is not easy task. That's why we prepared a comprehensive glossary of financial terms. Before you make serious financial decisions or sign any contracts make sure you understand the terms.
Financial Terms
Amortization - Paying off your debt over time, payments covering principal and interest.
Acceleration Clause - Gives the lender the right to demand the full amount due at anytime.
Arrears - The monies you are behind on.
Bankruptcy Chapter 7 - is where you loose your possessions but your debt is cleared.
Bankruptcy Chapter 13 - is where you keep your possessions and make payments to the court for your debt.
Beacon Score - Basically like your credit score but focuses on your late payments and defaults.
Buydown - A lump sum payment to reduce the loan time.
Charge-off - Also known as a write-off, a portion of debt that is erased.
Conditionalities - Part of the loan agreement that covers requirements other than the payments.
Consumer Credit Counseling Service - A not-for-profit company that helps consumers get out of debt.
Credit insurance - Pays of your credit debt if you loose your job or become disabled or sick.
Debt consolidation loan - One loan that pays off all your other loans so you can pay your debt easier.
Debt Management Plan - A plan that allows you to live by a budget and still pay back creditors in a fashion that actually reduces your debt.
Debt Settlement - An agreement where your creditors agree to take less money than what you owe.
Debt-to-income ratio - How much you owe per month compared to how much you make per month.
Graduated Payment - A repayment plan where the payments are small at first then get bigger.
Negative Amortization - A repayment plan that when done, won't have paid off the entire balance.
Reaffirmation - is a special payment plan with the court when you filed bankruptcy that allows you to keep a piece of property.
Re-age - Changing an account from delinquent to current without affecting the amounts due.
Renegotiable Rate - A loan that results in a negative amortization, that when the end of the loan comes, the part unpaid is due in one lump sum that is calculated at a different interest rate than the payments were.
Reschedule - Changing the length of the loan.
Security Interest - Basically your collateral you've offered for the loan.
Wraparound - When you have one high interest loan and one low interest loan, you combine them into one loan with an interest in the middle.