Definitions and Resources
LendNation Financial Terms Glossary
We are clearly defining complex terms in a way that makes them easy for our customers to understand. Click on a term in this financial terms glossary to learn more.
Account
An account is a financial arrangement with a bank or other financial institution that allows individuals or businesses to deposit, withdraw, and manage their money. Common types of accounts include savings accounts, checking accounts, and investment accounts.
ACH
ACH stands for Automated Clearing House, a network used for electronically moving money between bank accounts across the United States. It is commonly used for direct deposit payments, bill payments, and other electronic transactions.
Advance Payment
This is a payment made ahead of its normal schedule, such as paying for a good or service before you actually receive it. It’s like putting down a deposit or pre-paying for something.
Amortization Schedule
A detailed table that outlines the repayment plan for an amortizing loan, showing each payment’s breakdown of principal and interest over time.
Annual Percentage Rate (APR)
The Annual Percentage Rate (APR) is the cost you pay each year to borrow money. The APR includes interest and fees and is expressed as a percentage.
Annuity
An annuity is a financial product, often used for retirement savings, that pays out a fixed stream of payments to an individual over time. It’s like buying a plan that gives you regular payments in the future, usually after retirement.
Appreciation
Appreciation refers to the increase in the value of an asset over time. It’s when something you own, like a house or stock, becomes more valuable than when you first bought it.
Asset
An asset is anything of value or a resource of value that can be converted into cash. Assets include things like cash, real estate, stocks, or personal property.
Automatic Bill Payment
This is a method of paying bills automatically through a bank account or credit card, typically on a set schedule. It’s a convenient way to ensure bills are paid on time without having to manually process each payment.
Balance Transfer
The process of moving an existing debt from one credit card or loan to another, often to take advantage of lower interest rates or better terms.
Bank Statement
A bank statement is a summary of financial transactions that occurred over a period of time on a bank account. It shows all deposits, withdrawals, and other activity in your account during a specific period, like a month.
Banking
Banking is the business of providing financial services, such as deposits, loans, investments and payments, to individuals, businesses and other organizations. Banking involves accepting deposits from customers, granting credit in exchange for those deposits and using those funds to make loans or investments. Banks use the money they receive from customers to generate income by investing it in various assets, such as stocks or bonds.
Base Pay
Base pay is the initial rate of compensation an employee receives, not including extra bonuses, overtime, or other additional payments. It’s the core salary or wage before any additional perks are added.
Beneficiary
A beneficiary is a person or entity designated to receive benefits from a financial arrangement or instrument, like a will, trust, insurance policy, or retirement account, after the death of the owner or policyholder.
Bonds
Bonds are a type of investment where you lend money to an entity (like a government or corporation) in exchange for periodic interest payments plus the return of the bond’s face value at its maturity date. It’s essentially a loan you give out that’s supposed to be paid back with interest.
Borrower
An individual or entity that receives funds from a lender with the agreement to repay the borrowed amount, typically with interest.
Budgeting
Budgeting is the process of creating a plan to spend your money. It involves setting financial goals, tracking income and expenses, and planning how to allocate funds to meet various needs and goals.
Cash Back
Cash back refers to a perk offered by some credit and debit cards, where a percentage of the amount spent is returned to the cardholder. It’s like getting a discount on purchases, where the savings are given back to you as cash or credit on your account.
Checking Account
A checking account is a bank account that allows for easy access to your funds for daily transactions, such as deposits, withdrawals, and payments. It’s the go-to account for managing your day-to-day money flow.
Collateral
An asset or property that a borrower pledges as security for a loan. If the borrower defaults, the lender can seize and sell the collateral to recover the loan amount.
Commodity
Commodities are basic goods used in commerce that are interchangeable with other goods of the same type, including agricultural products, minerals, and energy resources.
Cosigner
A cosigner is someone who agrees to pay off a loan if the main person borrowing the money can’t make the payments. This helps a lot when you’re trying to get a loan but might not have the best credit history or enough income by yourself. This can make it easier for you to get approved for a loan, especially if it’s your first time borrowing money or you need a bigger loan.
Cost of Living
Cost of living refers to the amount of money needed to cover basic expenses such as housing, food, taxes, and healthcare in a certain place and time. It’s a measure of how expensive it is to maintain a certain lifestyle.
Credit Score
A credit score is a numerical expression based on a statistical analysis of an individual’s credit information, which is used to represent the creditworthiness of that individual.
Credit Utilization
The percentage of a borrower’s available credit limit that is currently being used. It is an important factor in calculating credit scores.
Debit Card
A debit card is a payment card that deducts money directly from a consumer’s checking account to pay for a purchase, eliminating the need to carry cash or physical checks.
Debt
Debt refers to money borrowed by one party from another under the condition that it is to be paid back at a later date, typically with interest. It can range from loans and credit cards to any form of owed money.
Debt Consolidation
Combining multiple debts into a single loan or payment to simplify financial management and potentially reduce interest costs.
Debt-to-Income Ratio
The Debt to Income Ratio (DTI) measures the percentage of a person’s gross income that goes towards paying debts. It is a key indicator used by lenders to assess an individual’s ability to manage monthly payments and repay debts.
Deductible
A deductible is the amount paid out of pocket by the policyholder before an insurance provider will cover any expenses.
Default
Failure by a borrower to meet the agreed-upon terms of a loan, such as missing payments or not repaying the loan at all.
Dependent
A dependent is a person who relies on another, typically a family member, for financial support.
Depreciation
Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life.
Direct Deposit
Direct deposit is an electronic payment method that deposits funds directly into a recipient’s bank account.
Earned Income
Earned income is the money derived from paid work, including wages, salaries, bonuses, and other employment compensation.
Economic Conditions
Economic conditions refer to the state of a country’s economic system and its current phase of the business cycle.
Equity
The value of an asset, such as a property or investment, minus any outstanding debts or liabilities.
Escrow
A separate account where funds are held by a third party, typically to cover property-related expenses such as taxes and insurance.
FICO Range
The range of possible values for a FICO credit score, typically between 300 and 850, with higher scores indicating better creditworthiness.
FICO Score
A credit score based on an individual’s credit history, used by lenders to assess the borrower’s creditworthiness.
Grace Periods
A specified period after the due date during which a borrower can make a late payment without incurring penalties.
Hard Inquiries
A credit check made by a lender or financial institution when a borrower applies for a loan, potentially affecting the borrower’s credit score.
Health Savings Account
A Health Savings Account (HSA) is a tax-advantaged account created to help individuals save for medical expenses that high-deductible health plans don’t cover.
HELOC (Home Equity Line of Credit)
A revolving line of credit secured by the equity in a borrower’s home, allowing them to borrow funds as needed.
Homeowners Insurance
Homeowners insurance is a form of property insurance that covers losses and damages to an individual’s house and assets in the home.
Household Expenses
Household expenses are non-discretionary expenses necessary for the maintenance of the home and daily living.
Household Income
Household income is the combined gross income of all members of a household, typically used to understand the household’s economic standing.
Identity theft
Identity theft is the deliberate use of someone else’s identity, typically as a method to gain a financial advantage or obtain credit and other benefits.
Inflation
Inflation is the rate at which the general level of prices for goods and services is rising, subsequently eroding purchasing power.
Installment Loan
A loan with a fixed number of regular payments (installments) covering both principal and interest over a predetermined period.
Instant Debit Card Funding
Instant debit card funding is available when you choose to pre-authorize the repayment of your installment, title, line of credit, or payday loan with the same debit card used to fund it.
Internal Revenue Service
The Internal Revenue Service (IRS) is the U.S. government agency responsible for tax collection and tax law enforcement.
Job Market
The job market is the market in which employers search for employees and employees search for jobs. It refers to the unemployment rate, available positions, and wages offered.
Joint Accounts
A Joint Account is an account held by two or more individuals who share responsibility for its management and any associated debts or liabilities.
Kiosk Banking
A banking service that allows customers to perform basic financial transactions, such as deposits and withdrawals, at self-service kiosks.
Lender
The entity or individual that provides funds to a borrower with the expectation of repayment, typically with interest.
Lien
A lien is a legal right granted by the owner of property, by a law or otherwise acquired by a creditor. A lien serves to guarantee an underlying obligation, such as the repayment of a loan.
Line of Credit
A line of credit is a more flexible type of loan compared to an Installment Loan or Payday Loan, and you can use it whenever you need extra cash. You can borrow up to a set amount, your credit limit, and pay it back over time or right away, and then borrow again up to the same limit.
Liquid Assets
Liquid assets are assets that can be quickly and easily converted into cash without significant loss of value.
Loan Application
A loan application is a process by which a potential borrower applies for a new loan, and a lender processes that application.
Loan Term
The loan term is the duration of time from when the loan is given to when it is completely paid off.
Loan-to-Value Ratio
A financial ratio that compares the amount of a loan to the appraised value of the asset being financed, often used in real estate lending.
Minimum Payment
The minimum payment is the lowest amount of money that one is required to pay on a credit card statement each month.
Money Order
A money order is a prepaid piece of paper, similar to a check, used for making payments.
Negative Amortization
A situation in which a borrower’s payments do not cover the interest due, causing the loan balance to increase.
Net Income
Net income is the amount of actual earnings remaining after all deductions, including taxes and social security contributions, have been subtracted from an individual’s gross income.
Net Worth
The difference between an individual’s or entity’s total assets and total liabilities, representing their overall financial value.
Origination Fee
A fee charged by a lender to cover the costs associated with processing a loan application.
Overdraft
A situation in which a bank account’s balance goes below zero, allowing the account holder to make transactions but incurring fees or interest.
Overdraft Fee
Understand what overdraft fees are, how they can impact your finances, and practical strategies to avoid them.
Overdraft Protection
Overdraft protection is a financial service offered by banks that prevents transactions from causing your account to fall below zero by automatically transferring funds from a linked account.
Payday Loan
Payday loans and online payday loans are short-term cash loans of small dollar amounts typically paid back with your next paycheck. A payday loan can give you access to quick cash when you need it most, whether it’s for daily expenses or unexpected emergencies.
Payment History
Payment history is a record of how consistently and timely an individual makes payments on their debts, significantly influencing their credit score.
Pre-Qualification
An initial assessment by a lender to estimate a borrower’s eligibility for a loan, based on basic financial information provided by the borrower.