Jargon busters

You could easily be mistaken in thinking you’re hearing or reading a foreign language when it comes to the world of finance. Just looking at a loan agreement with its pages of jargon can send your head into a spin.

However, don’t worry, we’re here to help. We’ve compiled a list of words and terms you’re likely to encounter when you take out a loan, and explain exactly what it is we’re talking about – It’s time to unjumble the jargon!

Agreement – A contract between a borrower (you) and a lender (I.e. Oxford Finance). It outlines the terms of your loan and repayments.

Arrears – The overdue amount or amount accrued after missing one or more scheduled loan repayments.

Co-borrower – Someone who has jointly taken out a loan with another person. They could be a partner, family member or friend. Co-borrowers share responsibility and liability in repaying the loan.

Creditor – The person or company (I.e. Oxford Finance) who lends money to the debtor – the person or company borrowing money.

Deposit – Is an upfront part payment towards the goods you wish to purchase, such as a car. The greater your deposit, the smaller the amount you will need to borrow. To get an indication of possible loan repayments check out our online Loan Calculator here.

Direct debit – Once authorised by you, a direct debit enables us (Oxford Finance) to take regular loan payments from your nominated bank account.

Dishonour – Is when there is not enough money in your account to make a loan payment.

Guarantor – Is a person(s) who agrees to be responsible for the debt of the borrower by offering their own assets such as their home as collateral. In general, business loans will require a guarantor.

GAP insurance – If your car is written off and the loan amount you owe is greater than what your insurer pays out, GAP insurance covers the shortfall.

Initial unpaid balance – Is the total amount you owe at the start date of your loan.

Interest – Is the amount a lender (I.e. Oxford Finance) charges the borrower (you) for taking out a loan. The interest rate you are charged is based on the type of security provided, value of security in relation to the loan amount, your previous credit history, and your credit and personal profile.

Loan repayment insurance – Depending on the level of cover you choose, your outstanding loan balance will be paid out if you unexpectedly die, or temporarily cover your loan repayments if you are unable to work due to illness or injury.

Mechanical breakdown insurance – Covers the cost to repair the mechanical or electrical parts of your vehicle if it unexpectedly breaks down.

Motor vehicle insurance – If you borrow money for a vehicle, Oxford requires your vehicle to be insured against theft and accident damage.

Payment waiver – Is an optional product you can purchase at the time you take out a loan. It is included in your repayments and will clear the balance of your loan depending on the level of covered events you choose. Find out more here.

Security – Means that if something were to happen, and you were unable to repay your loan, the lender would be able to sell your security (usually your car if you have taken out vehicle finance), to recoup the money owing on your loan.

Settlement – Is the amount required to repay your loan in full.

Trade in – When you purchase a vehicle from a dealer, you may be able to sell your old vehicle to the dealer as part payment towards the cost of your new vehicle.

Vehicle offer and sale agreement – Is the documentation from a dealer outlining the details of your pending vehicle purchase. This will include agreed price, finance details, vehicle details, any add-ons or accessories, trade-in information and values if applicable. It is important that you fully understand all the details and terms and conditions of the offer and agreement. If something doesn’t make sense, ask the dealer to explain it to you.

Please get in touch with our friendly team at Oxford if you have any questions around applying for finance.

We look forward to hearing from you.