Personal loans and car loans glossary

Four-wheel drive – designed to give you extra traction in off-road situations.

All-wheel drive – these drive systems power both the front and rear wheels all the time.

How much money a lender is willing to lend you. Among other things, your borrowing power depends on factors such as your income, expenses, assets and liabilities. When you’re applying for a loan, your lender will assess how much you can afford to repay and if the loan meets your needs before they can approve your application.

A comparison rate includes the interest rate and any fees and charges that relate to a loan. The comparison rate also depends on repayment frequency and the term of the loan.

A record on your credit report when you make an application for credit. This includes the date, type of credit you’ve applied for (personal loan, credit card, or mortgage), whether you’re a sole or joint borrower and the amount applying for. Several credit applications in a short space of time can result in a number of credit enquiries being listed on your report and can impact your credit score.

Is calculated based on the amount of money you’ve borrowed, the number of credit applications you’ve made and whether you pay on time. A credit score is represented as a number and helps lenders decide whether they’ll lend you money. The higher your score the better, as this gives lenders more confidence that you’ll be able to repay your loan.

Compulsory Third Party insurance – mandatory to help cover the cost of injuries sustained on the road.

Is how much you’ll have to pay to satisfy the terms of your loan contract and completely payoff your debt to the lender. The payoff amount is different from your current balance and includes the payment of any interest you owe through the period since interest was last charged. Also known as loan payoff.

Funds paid into the loan above your contracted minimum repayment.

A loan where the interest rate is fixed or locked in for a certain period of time. This means the interest rate and required loan repayments will stay the same for the period. This type of personal loan allows for certainty of repayments so budgeting for expenses can be easier and repayments won’t go up even if other interest rates increase during the fixed interest rate period.

The rate of interest applied to the money that is borrowed, that you need to pay as the borrower to the lender. This is defined as a percentage of the loan amount and is usually expressed as an annual percentage.

The length of time allowed to pay off the loan. It can differ with each lender, the type of loan you have, and the agreement between you as the borrower and the lender.

Fees paid to the lender throughout the term of the loan, such as a monthly fee, to cover costs or additional services available on the loan. The value of ongoing fees and the charge date are outlined in the loan conditions and in your contract.

Personal Property Securities Registration – lets people know if the personal property has security interests over them.

A loan pre-approval means that a lender has agreed, in principle, to lend you an amount of money but hasn't proceeded to a full or final approval.

A facility that allows you to access extra repayments that you’ve made on your loan. Your extra repayments are funds paid into the loan above your contracted minimum repayment. Availability of redraw facilities and redraw limits differ across product types.

A secured loan is when a financial institution has security over an asset – such as the car you’re purchasing with the loan. This means if something were to happen and you couldn't repay the loan, they would be able to sell the asset to recoup the money that’s owed.

A fee that’s payable to a state government on an application for registration or transfer of registration of a vehicle.

An unsecured loan doesn’t require you to use your car (for example) as security. It doesn’t require you to use anything as a security.

A one-off fee that you may have to pay to the lender to cover loan application processing costs. Also known as an application fee or establishment fee.

A variable rate loan has an interest rate that can change when the market interest rate changes. This means your repayments may also vary.

Vehicle Identification Number – a unique 17-character serial number used to identify a motor vehicle.