Decoding financial jargon

At some point in life, most people will need to apply for a loan. Whetehr it's for a home, car or an unexpected expense, the process can feel overwhelming, especially when unfamiliar financial terms start to emerge.

At Abound, we're committed to empowering you with the knowledge you need to make confident, informed decisions for a secure financial future.

Here are a few common terms you might hear during the lending process:

1. Equity: This refers to the market value of an asset compared to the amount you still owe on it. For example, if your home is worth $350,000 and you owe $150,000 on your mortgage, you have $200,000 in equity. Your equity can be a strong financial tool. Our Home Equity Line of Credit¹ (HELOC) allows you to borrow against the equity of your home to fund what's important to you, from education costs to home repairs, you choose how you spend it!
2. Variable vs fixed rate: A variable-rate loan has an interest rate that fluctuates with market rates, while a fixed-rate loan stays the same throughout the loan term. Fixed rates offer many benefits. Our Personal Loans² are fixed-rate, so you can enjoy payment predictability and budget your monthly expenses easier.
3. Collateral: This is your property that is used to secure a loan. If you have an Auto Loan², your car serves as the collateral.
4. Secured vs Unsecured: Secured loans require collateral as an asset the lender can claim if the loan defaults. Unsecured loans do not require collateral; this loan is issued based solely on creditworthiness.
5. Annual Percentage Rate (APR): The APR is the overall cost of borrowing, to include closing costs, interest and other fees. It gives you a better understanding of your borrowing costs compared to the interest rate alone.
6. Debt to income ratio (DTI): This referes to the measurement of your monthly debt payments compared to your gross monthly income. You can calculate your DTI by taking the amount of your monthly payments, dividing them by your gross monthly income, then multiplying it by 100.

Looking to apply for a new loan, or have questions about your current one? Visit your local branch today! Our team is happy to guide you every step of the way.