How repayments are structured over the life of a loan or lease, and what happens at the end.
20 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 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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