Feeling overwhelmed by all the car loans terms and phrases used? Our glossary will help you understand everything you need to know.
Comparison rate: This rate factors in all fees and charges incurred during the life of a loan, so it can be compared with the comparison rates of other loans. The interest rate alone can be misleading due to other fees and charges that can make the loan more expensive than it first appears.
Early loan repayment penalty fee: A fee that is incurred if you pay off your loan in full or partially before the end date of the term of the loan.
Establishment fee: The initial cost incurred to set up the loan.
Extra loan repayments: Making additional repayments over and above the agreed loan repayment amounts stipulated by your contract.
Fixed interest rate: An interest rate that doesn't change over time.
Interest rate: This is the rate at which you're charged for borrowing money.
Loan contract: The formal contract between the borrower and the lender that sets out the terms and conditions of the loan.
Loan portability: A facility that allows you to transfer your loan from one security to another (e.g. vehicle).
Loan repayment: The minimum agreed amount that needs to be paid at the stipulated frequency defined in your loan contract.
Loan term: The length of a loan.
Ongoing fees: A fee that may be payable periodically over the term of the loan.
Pre-approval: An approval process that takes place prior to confirming a loan. Based on the information provided, this provides an indication of how much you're able to borrow.
Redraw facility: A facility that allows you to withdraw money you've already paid back against your loan.
Secured loan: When the car you are going to purchase acts as security against the loan. Should you default on your repayments, the lender has a right to seize your car.
Unsecured loan: When there is no collateral (e.g. car or another assets) securing the loan.
Variable interest rate: The interest rate may fluctuate up or down.
Comparison rate: This rate factors in all fees and charges incurred during the life of a loan, so it can be compared with the comparison rates of other loans. The interest rate alone can be misleading due to other fees and charges that can make the loan more expensive than it first appears.
Early loan repayment penalty fee: A fee that is incurred if you pay off your loan in full or partially before the end date of the term of the loan.
Establishment fee: The initial cost incurred to set up the loan.
Extra loan repayments: Making additional repayments over and above the agreed loan repayment amounts stipulated by your contract.
Fixed interest rate: An interest rate that doesn't change over time.
Interest rate: This is the rate at which you're charged for borrowing money.
Loan contract: The formal contract between the borrower and the lender that sets out the terms and conditions of the loan.
Loan portability: A facility that allows you to transfer your loan from one security to another (e.g. vehicle).
Loan repayment: The minimum agreed amount that needs to be paid at the stipulated frequency defined in your loan contract.
Loan term: The length of a loan.
Ongoing fees: A fee that may be payable periodically over the term of the loan.
Pre-approval: An approval process that takes place prior to confirming a loan. Based on the information provided, this provides an indication of how much you're able to borrow.
Redraw facility: A facility that allows you to withdraw money you've already paid back against your loan.
Secured loan: When the car you are going to purchase acts as security against the loan. Should you default on your repayments, the lender has a right to seize your car.
Unsecured loan: When there is no collateral (e.g. car or another assets) securing the loan.
Variable interest rate: The interest rate may fluctuate up or down.
