Interest, rates, margins and the other numbers that decide what borrowing costs.
24 terms in this topic
The annualised percentage rate (APR) is the annual interest rate a credit provider must disclose on regulated consumer credit under the National Credit Code, excluding fees.
Read definitionA base rate is the reference interest rate a lender starts from, before it adds the margin, or spread, that reflects the borrower and the term.
Read definitionA basis point (bps) is a unit equal to one hundredth of a percentage point, used to express small changes in interest rates, yields, fees and spreads.
Read definitionBreak costs are the charges a lender passes on when a fixed rate loan is repaid or changed before the fixed term ends.
Read definitionA cap rate is either a ceiling written into a variable interest rate, or, in property, short for capitalisation rate: net operating income divided by value.
Read definitionThe cash rate is the interest rate the RBA targets for overnight loans between banks, the benchmark that anchors short-term funding costs and influences most Australian lending rates.
Read definitionA comparison rate is a single annual percentage that combines a loan's interest rate with most upfront and ongoing fees to show its ongoing cost more clearly.
Read definitionCompound interest is interest calculated on both the original principal and the interest already added in earlier periods, so balances and debts grow faster than with simple interest.
Read definitionDefault interest is an agreed or statutory rate of interest charged on a loan, invoice or judgment when a payment falls into arrears or a contract term is breached.
Read definitionA factor rate is a multiplier that short-term and alternative lenders apply to the amount borrowed to fix the total repayment, instead of quoting an annual interest rate.
Read definitionA fixed rate is an interest rate locked in for a set term, so the rate and usually the repayments do not change until that term ends.
Read definitionA flat rate is an interest method that charges a fixed percentage of the original principal for every year of the term, ignoring the balance you have repaid.
Read definitionA floor rate is the minimum interest rate a variable loan contract allows; lenders also use the phrase for the minimum rate they test serviceability against.
Read definitionInterest is the price of using money: what a borrower pays on a loan, or a saver earns on a deposit, expressed as a percentage rate on the principal.
Read definitionInterest rate risk is the exposure a financial asset, liability or portfolio has to changes in market interest rates, which alter the present value of its future cash flows.
Read definitionA lease rate factor is the monthly rental a lessor charges per dollar of equipment cost, used to price a lease without quoting an annual rate.
Read definitionMargin is the share of each revenue dollar left after costs, what a lender adds to its base rate, or your own equity in a geared share portfolio.
Read definitionA nominal rate is the headline annual interest rate a lender quotes before compounding within the year is taken into account, unlike the effective annual rate.
Read definitionPenalty interest is interest charged on an overdue amount by a revenue office, court or creditor to compensate for late payment and deter delay.
Read definitionA rate is a ratio or charge expressed against a unit, commonly per year, that measures cost, return or proportion; in finance it usually means an interest rate.
Read definitionSimple interest is interest calculated only on the original principal, never on interest already added, which keeps the charge flat across the term.
Read definitionA spread is the difference between two related rates or prices, such as a lender's rate and its benchmark, or an asset's buy and sell price.
Read definitionA variable rate is an interest rate that can move up or down over the life of a loan, following the lender's benchmark and its margin.
Read definitionYield is the income an asset produces over a year, expressed as a percentage of what it cost or what it is worth today.
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