Glossary

We understand that this may be your first time learning about debt consolidation solutions, which is why we’ve provided this helpful glossary. Here you’ll find definitions to some of the most important terms about regarding debt:

• Annual Percentage Rate - The yearly interest percentage of a loan, as expressed by the actual rate of interest paid
• Bankruptcy - The legal process in which one firm or person declares inability to pay debt(s). All available assets are liquidated and the proceeds of this are distributed to creditors.
• Budget - A budget is a detailed list of all of your income and expenses.
• Collections - Actions taken to obtain payment from a consumer who has an outstanding debt.
• Debt - Refers to any money that is owed or due to someone else.
• Interest - Interest is the fee charged by a lender to a borrower for the use of borrowed money, usually expressed as an annual percentage of the principal. The rate depends on several factors, such as the value of money, the credit risk of the borrower, and the inflation rate.
• Late charge - A fee imposed by a lender to a borrower when the borrower fails to make a payment on the due date.
• Lender - A person or company that offers to lend money to a borrower for a given period of time.
• Principal - In reference to debt, the amount of money owed, not including interest.
• Secured Loan - A loan which is backed up by assets belonging to the borrower in order to decrease the risk taken on by the lender. Secured loans typically have lower interest rates than unsecured loans.
• Term - An agreed upon period of time in which a loan or debt must be repaid.
• Unsecured Loan - A type of loan where the lender has no entitlement to any of the borrower's assets should he or she fail to make the loan repayments. These loans normally carry a higher interest rate than a secured loan.