The world of finance can be overwhelming – even intimidating at times. It can seem so confusing that attempting to understand it all often feels impossible. However, at Cash Loans Alberta, we believe that making sound financial decisions comes from a deep comprehension of the variables at play.
And what better way to grasp such factors than to understand the terminology that is used to describe them? So whether you’re applying for an equity loan or an auto title loan in Alberta, the principle remains the same: learn the language.
This way, you’ll be better equipped in knowledge and understanding to make wise decisions in regards to your loan. With that being said, here are 7 terminologies you should know before signing a loan in Alberta.
1. Collateral
Simply put, collateral is merely an asset that you put forth or provide to a lender in order to procure a loan. Collateral can come in many forms such as vehicles, investments, real estate, even cash. However, be weary, because failure to pay back your loan could result in unfavourable consequences.
For instance, if you took out an auto loan and failed to pay it back in the specified and agreed upon time, then the lender has the authority to legally repossess your vehicle.
2. Credit Score
When you apply for a loan, the lender will have to review your application and decide whether to approve you or not. To make this decision, they will review your credit score and history. Your credit score is nothing more than a financial track record that exhibits your level of “monetary trustworthiness.”
3. Cosign
If you have poor credit or no credit at all, a cosign can be used as a guarantee of payment. Getting someone (family, friend, associate, etc) to cosign a loan on your behalf means if you fail to pay the loan on time, the responsibility of payment will fall squarely on the shoulders of the co-signer.
4. Unsecured Loan
The best way to describe an unsecured loan is a loan that is absent of collateral. Typical examples include student loans or credit cards. Due to the nature of an unsecured loan, failure to make payments does not give the lender power or authority to seize or repossess any of your assets. However, that is subject to change if a court ruling permits otherwise.
5. Principle
The principle of a loan is the dollar figure owed, agreed upon, and borrowed from the lender. Once you begin making regular payments on your loan, the balance on the principle decreases. Additionally, an important fact to keep in mind is that interest accrued is separate from the principle balance itself.
6. Late Fee
Late fees usually accumulate when you make past due payments – it is a form of interest. Moreover, the time that the late fees are charged, in addition to the amount you are liable to pay, are both based on the specific lender you happen to be indebted to. A good place to learn about all of these details is your loan agreement, which brings us to the final phrase of terminology you should know, which is…
7. Loan Agreement
Your loan agreement is specified as the legally binding contract between the lender and yourself. Relevant information in regards to the loan will be included in the agreement. This information includes:
- The amount of your loan
- APR (Annual Percentage Rate)
- The amount for late fee charges
- Schedule for payment
- Default consequences, etc
Thoroughly reading through and understanding this contract is vital. So before you sign for a loan in Alberta, ensure that you fully comprehend what the details, rules, and specifications are in your contract.
Conclusion
Taking out a loan can be confusing when you don’t understand all the relevant language and information. However, once you gain a solid grasp on the jargon and understand the details, loans in general become much easier to navigate.
At Cash Loans Alberta, our team of loan specialists work to clarify any confusing concepts so you’re educated and aware of the process.
As such, if you’re in need of a loan or would like more information, contact us today to speak with one of our experts.
