Euribor, chord, annuity, margin, prime rate and creditworthiness. When applying for a loan, you may run into the banking and financial vocabulary, which is not always the clearest one. We’ve compiled a comprehensive glossary of common concepts in the financial industry.
Annuity Loan = A general form of loan that predefines the term of the loan and the due date of the loan, but the installments change according to the evolution of the reference rate. That is, if interest rates change, the installments will be recalculated.
Chord = Chord means that the creditor comes to repay the loan and forgives a portion of the debt. Typically, a chord means lowering interest rates or canceling overdue interest on old debt.
This is called the interest rate agreement
A chord is usually possible when the debtor has access to court debt settlement or has combined his loan with the Guarantee Fund.
Car loan = loan for the purchase of vehicle-fetched. Car loans are provided by banks, private finance companies and car dealerships (usually in partnership with banks and finance companies). You can apply for a car loan as secured or unsecured.
ASP Account = The Home Savings Account is an account sponsored by the Finnish Government for home savings and acquisition. You can open an account between the ages of 15-39. An ASP account is for the first time home buyer. The holder of an ASP account receives a mortgage loan after saving 10% of the price of the home to be purchased. Often, an ASP account holder also gets a mortgage on better terms, as long-term savings on an ASP account are a sign of regular income and good solvency for the bank.
Mortgage = Loan for home purchase
Mortgage is one of the most common and long-term loans. The loan period for a mortgage is generally 25-30 years. The amount of the mortgage to be granted depends on the loan applicant’s ability to pay. In addition, a mortgage must be secured. Usually the collateral is purchased, but the mortgage can also be secured by other real estate, such as a summer cottage or securities.
Bullet loan = A bullet loan is repaid at the end of the pre-agreed loan period, but the interest is paid in regular installments over the entire loan period. A bullet loan usually has a fixed or a floating rate.
Gross Income = Total salary income, net of tax.
Euribor = Euribor is a common reference rate for euro countries published daily. There are different Euribor rates and the name of the rate refers to the time when the loan rate is being revised. If the interest rate is linked to a three-month Euribor interest rate, the interest rate on the loan will remain unchanged at three-month intervals until the next interest rate review, which will take place every three months.
Flexicurity is a very similar type of payment arrangement
To consumer credit. Flexicurity is usually granted unsecured and loan repayment is usually flexible. In addition, Flexible Credit can be withdrawn in full or in smaller installments to your own account. If you credit your account in installments, the interest is paid only on the withdrawals and not on the entire credit.
Fixed costs = Fixed costs are costs that are beyond the control of the payer. Nor will fixed costs change in the short term. Rent and electricity bill are examples of fixed costs.
Fixed installment loan = A form of loan in which the installments remain the same, but the maturity varies according to the reference interest rate. If the reference rate increases, the installments will not be increased but the loan period will be extended.