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Auto Refinance
A refinance auto loan is a loan secured by a car that is paid off at a time.
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Balance Transfer
The process of moving an unpaid credit card debt from one issuer to another. Card issuers sometimes offer teaser rates to encourage balance transfers coming in and balance transfer fees to discourage them from going out. |
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Bankruptcy
A legal proceeding that protects a debtor from legal action by some creditors. There are two basic ways of filing for personal bankruptcy. A Chapter 7 bankruptcy declaration gets rid of all debts (except some taxes and maybe alimony payments); Chapter 13 allows a borrower with a steady income to pay off bills over a 36- to 60-month period. |
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Cash-Out Refinance
The taking out of a new mortgage on the same property in which the amount borrowed is greater than the amount of the previous mortgage. The difference is taken out in cash. |
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Consumer Credit Counseling Service
A service that offers counseling about how to work out a realistic budget and debt repayment plan and work with creditors. The goal is to ensure that debts are paid back over time. |
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Credit Limit
The maximum amount of charges a cardholder may apply to the account. The Consumer Federation of America suggests people carry credit lines no greater than 20 percent of their gross household income. For example, people with a gross income of $50,000 would cap credit lines at $10,000. |
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Credit Line
The maximum amount of money available in an open-end credit arrangement such as a credit card, or overdraft protection. |
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Credit Report
A document containing financial information about a person, focusing on his or her history of paying obligations, such as a mortgage, car payment, utilities, and credit cards. Also includes current balances on outstanding debts, the individual's amount of available credit, public records such as bankruptcies, and inquiries about credit from various companies. A person with a good credit report is likely to get a better interest rate than someone with a poor credit report. |
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Credit Score
A number, roughly between 300 and 800, that reflects the credit history detailed by a person's credit report. Lenders calculate this number with the assistance of computer systems as part of the process of assigning rates and terms to the loans they make. |
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Creditor
One who is owed money. |
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Debt Consolidation
The replacement of multiple loans with a single loan, often with a lower monthly payment and a longer repayment period. It's also called a consolidation loan. |
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Debt-To-Available-Credit Ratio
The amount of money a person has in outstanding debt, compared to the amount of credit available on all of the individual''s credit cards and credit lines. The higher a person''s debt to available credit, the more risky the individual appears to potential lenders. |
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Home Equity Loan
Home equity loan is a loan based on the amount of equity a homeowner has in the property. The interest paid on a home equity loan is usually deductible. Unlike a home equity line of credit (HELOC), the home equity loan features a fixed rate, payment and term, usually five to 15 years. |
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Home Equity Line Of Credit
Home equity line of credit is an open-ended loan, paid as revolving debt, that is backed by the portion of the home's value that the borrower owns outright. Interest paid on a home equity line of credit is usually tax deductible. |
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Minimum Payment
The minimum amount a cardholder can pay to keep the account from going into default. Some card issuers will set a high minimum if they are uncertain of the cardholder's ability to pay. Most card issuers require a minimum payment of 2 percent of the outstanding balance. |
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Mortgage Refinance
A refinanced mortgage is one in which a borrower pays off an old loan with a new loan. People who refinance a mortgage usually do so to get a lower interest rate, lower their payments or to take cash out of their equity. |
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Personal Loan
A personal loan is a loan from a lender that is not secured by any property. Rates tend to be similar to those of credit cards, which are another type of unsecured loan.
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Unsecured Debt
Debt that is not guaranteed by the pledge of any collateral. Most credit cards are unsecured debt, which is a main reason why their interest rate is higher than other forms of lending, such as mortgages, which employ property as collateral. |
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