Glossary
Glossary of personal loan termsApnaloan.com Research Bureau
10 Aug 2007
AFC (Additional Finance
Charges): Penalty levied for paying
installments late.
Amortisation:
The repayment of a loan or debt in regular installments. Each installment is
split into a principal repayment and an interest payment.
Asset:
An immovable or movable property which can be used as security, against which
credit can be offered.
Compound
Interest: Interest charged or paid on the
principal and the accumulated interest, unlike simple interest, which is paid
only on the principal.
Credit
Profile: The profile of an individual or a
company, which reflects the person's or the company's capacity to receive credit
and honour the terms and conditions of commercial credit.
CPA (Credit Processing
Authority): The credit sanctioning
authority which approves lending to a customer. Most banks and financiers have
in-house credit teams, while some outsource CPAs.
Depreciation:
The decline in value of an asset over a period of time.
DAS (Deduction against
Salary): An arrangement where a salaried
employee asks his employer to deduct the loan installment from his salary and
pay it to the financier. This is done with the mutual consent of the employer
and the financier.
DSA (Direct Sales
Associate): An agency of the financier,
which takes care of customer sales and service. Most car financiers do not have
their own field sales force as their sales and service are handled by the
agency. They are authorised by the financiers.
DMA (Direct Marketing
Associate): Another name for DSA.
DPC (Delayed Payment
Charges): Same as AFC. (Additional Finance
Charges)
EMI (Equated Monthly
Installment): A fixed amount you have to
pay every month against the loan you have taken during the duration of your
loan.
FCI/FI: (Field Credit
Investigation or Field Investigation): The
investigation done by an outside agency on behalf of the financier to
authenticate the identity of the client and confirm his place of residence and
office address.
FIR (Field Investigation
Report): The report filed by the Field
Credit Investigator or a field investigator after visiting the client\'s
residence and place of work.
Franchisee:
Another name for DSA and DMA.
Insurance Cover
Note: A note issued by the insurance
company before the actual policy document is issued to the client. It confirms
that the asset has been insured. This is done because the policy takes a few
days to be made, since it has to be processed by the
company.
IRR (Internal Rate of
Return): The rate of return which the
financier would earn on the loan transaction.
Lease: A
contract by which the owner of an asset lets it out for use to another for a
specified time on payment of a specified amount called rental.
Lending Rate:
The interest charged by the financier on the amount financed.
Loan Tenure:
The duration for which a loan has been provided.
LPC (Loan Processing
Charges): Service charge collected by a financier. Nowadays, few
financiers collect it.
NeAR (Net Effective
Annualised Rate): The net rate paid by the client after taking into
account all discounts, other charges paid, subventions and advance installments.
It is the rate to be used for evaluation of two or more offers.
NOC: No
Objection Certificate
PDC (Post-Dated
Cheques): Cheques issued in favour of the financier for repayment of
loan.
Margin Money:
Financiers do not fund the entire value of the asset being purchased. They
expect the customer to bring a certain percentage of the total amount required
for the purchase as margin, called Margin Money.
Octroi: A tax
or cess applicable on goods which have entered a particular city/town.
Principal: The
capital sum in a finance transaction as opposed to interest.
Registered
Owner: The person in whose name a vehicle is registered.
Returns:
Yields or profits made in a financial transaction.
Risk: Chance
or danger of a loss of capital and/or interest in financial transaction.
Stamp
Duty: Duty levied by the state government on certain legal documents and
financial contracts.
Standing
Instructions: Instructions to a bank to debit a fixed amount from your
account and pay your financier.
Statutory
Charges: Charges like stamp duty, sales tax etc imposed by the
government.