How repayments are structured over the life of a loan or lease, and what happens at the end.
21 terms in this topic
Amortisation is the process of spreading a cost over time: repaying a loan in scheduled instalments of interest and principal, or expensing an intangible asset over its useful life.
Read definitionAn amortisation schedule is a table showing every repayment on a loan, splitting each one into interest and principal so you can see the balance fall.
Read definitionA balloon payment is a lump sum, agreed upfront, that is paid at the end of a loan term and lowers the regular repayments by deferring part of the principal.
Read definitionA balloon refinance is a new loan taken out to pay the balloon payment owed at the end of a car or equipment finance term.
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 direct debit is an authority, given through a Direct Debit Request (DDR), that lets a biller withdraw agreed payments from your nominated bank account, usually for recurring bills.
Read definitionA disbursement is money paid out to a third party or on your behalf, such as loan funds released at settlement or costs a solicitor pays for you.
Read definitionA drawdown is a borrower taking funds under an approved loan facility, in one payment or in stages, once the lender's conditions have been met.
Read definitionEarly settlement is paying a loan or lease out in full before the end of its term using the lender's payout figure, or bringing a property settlement date forward.
Read definitionGuaranteed future value (GFV) is a car loan feature where the financier will accept the car at term end in place of the final payment, within kilometre and condition limits.
Read definitionInstalment credit is consumer credit repaid in regular, pre-set payments of principal and interest over a fixed term, reducing the balance to zero or an agreed final amount.
Read definitionLease payments are regular amounts a lessee pays a lessor for the use of an asset over a set term, bundling a finance charge with fees and sometimes services.
Read definitionPayment frequency is how often scheduled repayments fall due on a loan, typically weekly, fortnightly or monthly, which affects total interest, loan term and how repayments fit your cashflow.
Read definitionA payout is the total amount needed to close a loan or lease on a given date: the balance owing, accrued interest and any break costs or fees.
Read definitionPrincipal is the amount of money you originally borrowed or, on a running loan, the part of that sum you still owe, excluding interest, fees and charges.
Read definitionRefinancing is replacing an existing loan with a new one, from the same or a different lender, to change the interest rate, term or features, or to release equity.
Read definitionA roll-over is an automatic renewal clause that extends a fixed-term agreement for a new term unless one party gives notice to end it within the required window.
Read definitionSettlement is the final stage of a finance deal, where the lender releases funds, security is registered and you take delivery of the asset.
Read definitionA stage payment is a pre-agreed instalment of a building contract price, paid when a defined stage of work such as slab or frame is complete.
Read definitionA term is a statement in a contract that creates rights or obligations for the parties, or the period for which the agreement runs.
Read definitionA termination fee is a contractual charge for ending an agreement before its agreed end date, or for triggering a contract exit event.
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