We've organized the most common financial terms and explained them in simple, friendly ways.
Every life insurance policy includes a death benefit, which represents the face amount (or coverage amount) paid to the beneficiary in the event that the insured dies during the term (time period) of coverage.
The act of combining multiple debts (e.g., credit cards, student loans) and consolidating them into a new loan, with a potentially lower net interest rate. A consumer can consolidate multiple student loans through the process of student loan refinancing, or convert multiple credit card balances into one personal loan, which involves paying off the existing debts and then repaying the new loan based on the lender's terms and conditions.
Often considered by lenders when applying for loan products (specifically a mortgage), this ratio calculates your monthly minimum debt payments divided by your monthly pre-tax income.
A legal document/contract that transfers property ownership from a seller to a buyer. A deed contains details about the transaction and the property (e.g., the structure itself and property lines).
When a borrower fails to pay back a loan after a certain time period (typically three to nine months), under the terms of the loan agreement, the borrower/loan goes into default. In this instance, the entire loan balance is typically due to the lender.
Habits and practices that can reduce a driver’s chances of getting into an accident, to avoid filing claims and increasing their premium. Defensive driving examples include: not speeding, maintaining a safe distance between vehicles, and keeping both hands on the steering wheel. Drivers can also take defensive driving courses to help lower their rate/receive a discount.
When a borrower falls behind on payments, they/the loan is considered delinquent. Delinquency is a prelude to default, which, after three to nine months can result in the loan balance being due in full.