This is a Pdf version of our consultations that will help you understand what it is The Fresh Start Financial Group can do for you or your business. Although all services that we provide aren't covered, it will answer most questions that clients have. Please feel free to navigate the Pdf at your own pace.
Terms to Know
Amortization is paying off debt in regular installments with fixed payments. This means your monthly payment remains the same throughout the loan. Read more about Amortization.
APR (Annual Percentage Rate)
APR stands for Annual Percentage Rate. This is the amount of interest you’ll pay within one year. When searching for credit cards or loans, the lower the APR the better Read more about APR (Annual Percentage Rate).
An auto lease is a financial arrangement that enables an individual to obtain a vehicle for use without paying for it entirely. They get access to the vehicle for a certain term (usually two to five years) and then return the vehicle at the end of that period, sometimes with an option to buy it outright. Read more about Auto Lease.
An auto loan is a loan that person takes out in order to purchase a motor vehicle. Auto loans are typically structured as installment loans and are secured by the value of vehicle being purchased. Read more about Auto Loan.
Bad credit means you have a low credit score. This can be caused by a number of things. Late payments, bankruptcy, and maxing out a credit card can all contribute to a lower credit score. Any score between 300 and 620 will make it difficult to get loans, credit cards, or reasonable interest rates. Read more about Bad Credit.
Bad debt refers to debt that is used to finance spending on non-appreciating items. This includes credit cards, auto loans and some personal loans. While these kinds of loans and financial products can be used responsibly to the benefit of the consumer, these debts still do not increase the borrower’s overall net-worth. Read more about Bad Debt.
A balance is the amount of money available for withdrawal through a bank account, or an amount of money owed to a financial institution. It can also be used to describe the process of budgeting and tracking your finances, as in "balancing a checkbook." Read more about Balance.
Bankruptcy is a legal procedure available to businesses and individuals who are unable to repay their debts. When a person enters bankruptcy, their assets may be evaluated and sold in order to pay off as much of their debt as possible. Read more about Bankruptcy.
A budget is a plan for your money, within a certain amount of time. Making a budget means figuring out how much money you’ll have, what you need to pay for, and how much you’ll have left over. Read more about Budget.
A cash advance is a short term loan that person can take out against the limit on their credit card. While they are convenient, they come with much higher interest rates than normal credit card transactions and should be reserved for emergencies. Read more about Cash Advance.
A charge-off is when a creditor writes off a debt that is owed to them on their balance sheet when it is past due. Usually a charge-off will be a debt that is at least 180 days past due. Read more about Charge Off.
A checking account is a bank account that allows customers to deposit and withdraw money by using paper checks, ATMs, and debit cards. Read more about Checking Account.
Collateral refers to an asset or property that a borrower gives a lender in order to secure a loan. If the borrower cannot repay the loan, the lender can then seize the asset or property to recoup their losses. Loans that involve collateral are called ‘secured loans.’ Read more about Collateral.
A collection agency is a business that is hired by a lender to recover overdue funds. The will either earn a fee on what they collect or will purchase the debt from the lender at a discount. They are known for being persistent and sometimes aggressive in their methods. They will sometimes sue a debtor and take them a court in order to legally seize their funds or assets. Read more about Collection Agency.
A FICO score is a credit score developed by the FICO company. These scores are created using information from a person’s credit report about their history of using credit and managing debt. Read more about FICO Score.
This term is used to describe any fee charged when borrowing. This includes interest, transaction fees, late fees, or anything else you have to pay outside of the amount you borrowed. Read more about Finance Charges.
Fixed rate simply means that the interest rate stays the same. If a loan does not have a fixed rate, then the interest may increase throughout the life of the loan. Read more about Fixed Rate.
Good credit means having a high credit score. This means you’re more trustworthy when you borrow. If you make payments on time, and only borrow or spend as much as you need, you’ll have better credit. This helps when applying for a loan or credit card because you’re more likely to be approved, and get better interest rates. A credit score between 680 and 850 is considered good. Read more about Good Credit.
A Grace Period is the amount of time before interest or late fees start building up. There’s usually a grace period for credit card purchases, but not for cash advances. If you can pay on the due date, or during the grace period, you’ll save money by avoiding interest and additional fees. Read more about Grace Period.
Grants are a type of financial aid. Unlike a loan, a grant does not have to be repaid. They usually are given by a school, a charitable organization or a government body, both state and federal. The most common kinds of grants are those given to students towards the cost of attending college. Oftentimes, a grant will come with certain eligibility requirements that must be met in order to qualify. Read more about Grant.
Home Equity Loan
The loan you receive once you’ve been approved for a second mortgage. It will be based on the value of the home, and your initial mortgage. Read more about Home Equity Loan.
An installment loan is a safe loan that is repaid through a set amount of scheduled payments. Read more about Installment Loan.
Interest is the cost of borrowing money. When you take out a loan or use a credit card, you'll be required to pay back a specified amount in addition to what you borrowed. That amount is the interest. When you lend money or save money in certain bank accounts, you gain interest. Read more about Interest.
An interest rate is the percent of a principal loan amount that is charged to the borrower. For instance, if you borrow $100 at an interest rate of 20%, then you will pay back $100 plus another $20 of interest. Having a good credit score will make it easier to find lower interest rates. Read more about Interest Rate.
An investment means spending money on something now, with the hopes that it will make you money in the future. Getting a college degree, buying stock, and buying a home are all considered investments. Read more about Investment.
The Internal Revenue Service, better known as ‘The IRS’, is a bureau of the Department of the Treasury charged with collecting taxes, enforcing the nation’s tax laws and administering the Internal Revenue Code. Read more about IRS.
Any person or company that offers money to people with the expectation that it will be paid back. Banks, credit unions, and loan companies are all lenders. Read more about Lender.
Line of Credit
A line of credit is a flexible loan that grants a borrower access to money (up to a specified maximum amount determined by the bank or lender). Interest is only charged on the money that the borrower chooses to use. Read more about Line of Credit.
A loan fee is any fee associated with a loan or credit card that does not include the interest rate. Read more about Loan Fee.
Loan forgiveness is a process under which you no longer have to repay your loan. The entire outstanding balance is ‘forgiven.’ This rarely happens with private loans and is most common with federal student loans. However, loan forgiveness is still fairly uncommon. It can result from your school closing, permanent disability and taking jobs in certain public service fields. Read more about Loan Forgiveness.
The Microloan program is designed to provide loans for small businesses and non-profit childcare centers. The average microloan is $13,000; while others go as high as $50,000. Read more about Microloan.
A mortgage is a loan used to buy a house. The loan is “secured”, meaning you have to put the home up as collateral. You make monthly payments to settle the loan, but if you fail to pay, the mortgage company can take your home. Read more about Mortgage.
NSF stands for “Non-Sufficient Funds.” An NSF Fee is charged when a bank account does not have enough money in it to honor a check drawn on that account. Read more about NSF Fees.
An origination fee is a charge that lenders assess to cover processing costs associated with providing a borrower’s loan. Read more about Origination Fee.
Overdraft Protection is a service offered by banking institutions on their checking accounts that covers an account holder's transaction even if their account lacks sufficient funds. Overdraft protection can be a line of credit or a link to an additional account or credit card. They come with additional fees and/or interest. Read more about Overdraft Protection.
A pawn shop is a business that offers secured, short-term loans. Customers can bring in valuable items to use as collateral. Common items people use are jewelry, electronics, and even firearms. The loans are rarely larger than a few hundred dollars and have monthly finance charges (interest plus fees) usually in the range of 5-25%. If a customer does not pay back the loan, the pawn shop can sell their item to recoup its losses. Read more about Pawn Shops.
A payday loan is a type of unsecured, small-dollar, predatory personal loan that comes with short repayment terms and very high interest rates. Read more about Payday Loans.
Compound interest is interest that earns interest. Compound interest on investments or savings accounts can make you a lot of money over time. However, compound interest on credit cards or loans can mean that the amount you owe grows even faster than it would have otherwise. Read more about Compound Interest.
is a way of borrowing. It basically means buying something now, and paying for it later. For example, if you make a purchase with a credit card or take out a loan, you’re required to pay it back in the future. Read more about Credit.
This is a business that collects information on people’s credit history and then provides this information to lenders to aid in their decision-making. This information can determine whether or not you are granted a loan and how much interest you are charged. Credit bureaus also determine your credit score. The three main credit bureaus in the United States are Experian, TransUnion and Equifax. Read more about Credit Bureau.
A credit check is a review of your credit history to find out if you’re reliable. Any time you apply for a loan, financing, or a credit card, your credit report and personal information will be reviewed to see how likely you are to make payments. Read more about Credit Check.
Credit Counseling is a service designed to help borrowers improve their credit, avoid bankruptcy, and in many cases renegotiate their debts. Provided by nonprofit financial organizations, Credit Counseling often provides credit education, budgeting tools and other financial services. Read more about Credit Counseling.
Credit history is a complete record of an individual’s creditworthiness. This information includes outstanding debts, repayment behavior, and credit information. Credit history is collected and organized in a credit report. Read more about Credit History.
Credit limit is the maximum amount that a financial institution allows a client to borrow. Read more about Credit Limit.Credit ReportA report that has information about your credit and payment history. It shows how often you make payments on time, how much you’ve borrowed, and how much you currently owe. Lenders use this report to decide whether to give you a loan, and what your interest rate will be. Read more about Credit Report.Credit ScoreA three digit number that shows how trustworthy you are when you borrow. A credit score can range from 300 to 850, with a higher score being better. Your individual score is based on several things, like how much debt you have and whether you make payments on time. Read more about Credit Score.
Credit unions are like banks, but they don’t make money from their members. They’re known for helping people save money, and offering better options for borrowing. Unlike banks, which anyone can join, credit unions have requirements to become a member. Usually people are eligible to join based on where they work, where they live, their church, or their college. Read more about Credit Union.CreditorA creditor is a person or institution that lends money to another. The creditor is then owed that money, usually with interest. Read more about Creditor.
Credit worthiness is a description of an individual's credit health and history. Read more about Creditworthiness.
DebitIn banking, a debit is a bookkeeping term for a transaction that reduces the amount of money deposited in an account. When you pay a bill using funds from your checking account, the entry for the amount withdrawn is called ‘a debit.’ Read more about Debit.
DebtDebt is money an individual owes to a lender. There are many types of debt, including personal debt, credit card debt, student loan debt, and more. Taking on debt can also mean incurring interest fees, meaning you'll be charged money for the privelege of borrowing money. Read more about Debt.
Debt Consolidation is a method for paying down debt. It involves combining many smaller debts into one larger debt—oftentimes by taking out a new loan or opening a new credit card. The new debt usually comes with more favorable terms than the old debts, and can save people money over time. It is most commonly used with consumer debt, but other forms of debt—such as student debt—can be consolidated as well. Read more about Debt Consolidation.
A debt settlement program involves working with a third party to reduce your outstanding debts. The company negotiates with your creditors to settle for a smaller repayment amount than what you currently owe. These programs are not without their risks, including negative marks on your credit history, additional interest and late fees accrued during the negotiation and even possible scams. Read more about
The Debt Snowball is a strategy for debt repayment. It involves paying off all a person’s debts beginning with the debt that carries the lowest principal balance and then working up to the debt with the highest balance. Read more about Debt Snowball.
A debt trap is a situation in which a borrower is led into a cycle of re-borrowing, or rolling over, their loan payments because they are unable to afford the scheduled payments on the principal of a loan. These traps are usually caused by high-interest rates and short terms. Read more about Debt Trap.
A debtor is any individual or institution that owes money to another individual or institution. Read more about Debtor.
To default means to fail to repay a loan or line of credit. A borrower can default on their loan if they fail to pay back either the principal loan amount or the interest. Read more about Default.
A deficit is what occurs when a person or company doesn’t have enough money to cover its expenses and debts. The amount they lack is referred to as a deficit. Read more about Deficit.
Direct deposit mean receiving payment electronically, straight to your bank account, rather than through a paper check. Read more about Direct Deposit.Direct LoanA direct loan is a loan made directly from a lender to a borrower, rather than through a third party. Read more about Direct Loan.
A dividend is a portion of a company’s earnings that is paid out to its shareholders. These payments can be made through cash, shares of stock, or other property. Dividends can also be issued by investment funds. Read more about Dividend.
A down payment is an initial payment made on a large purchase, often expressed as a percentage of the total cost. The down payment is paid in full up front while the remaining cost is paid in installments, often through a loan. Read more about Down Payment.
Peer to Peer Lending
Peer to peer lending—otherwise known as P2P lending, person-to-person lending, or social lending—is a type of lending in which individuals loan their money to other individuals without the use of banks or financial institutions. This is most commonly done online. Read more about Peer to Peer Lending.
Personal Debt (which is sometimes referred to “Consumer Debt”) is any financial obligation that is owed by an individual or a household, as opposed to by a business or government. Read more about Personal Debt.
Personal Loan Agreement
A personal loan agreement is a written contract between two private parties, usually friends or relatives, that details the personal loan arrangement between the two. This usually includes the date of a loan transaction, the projected repayment date, the amount of money borrowed, and any interest rate or other stipulations. Read more about Personal Loan Agreement.
Predatory lenders are financial institutions that use deceptive practices and unreasonable terms to profit off of borrowers in desperate need of funds. Read more about Predatory Lenders.
A prepayment penalty is a fee charged by lenders when borrowers pay off their loan before the end of the term. Read more about Prepayment Penalties.
The prime rate is the interest rate that banks charge borrowers who are the most trustworthy, or creditworthy, based on their borrowing history. Read more about Prime Rate.
The principal is the amount of money that is borrowed through a loan. The term also refers to the amount of money that is left on the loan after payments have been made. Read more about Principal.
A private loan is a loan made by a non-federal institution such as a bank, school or state agency. The distinction most commonly applies to student loans. Private loans are often more expensive than federal loans and come with less-flexible payment terms. Read more about Private Loans.
To refinance a loan means to take out a new loan with better interest rates to replace an old loan. It is most common used in reference to home mortgage loans but can apply to any kind of loan. Read more about Refinance.RefinancingTo refinance a loan is to take out a new loan with more favorable terms to replace your old loan. This can result in lower monthly payments, lower interest rates and free up additional cash. However, it can also significantly extend the repayment period. Read more about Refinancing.
Repossession is when your vehicle or property is taken away because you failed to make payments. Once the lender takes the property, they are legally allowed to sell it to make their money back. Read more about Repossession.
A loan offered to homeowners that are 62 or older that lets them exchange part of the value of their home for cash. It’s referred to as a reverse mortgage because the lender will make payments to the borrower. The borrower is not required to pay back the loan until the home is sold. Read more about Reverse Mortgage.
Rollover means delaying payment on a loan. This happens if the borrower can’t afford to pay the loan when it’s due. Lenders will usually let you delay your payment, but will charge an additional fee. Read more about Rollover.
A savings account is a deposit account held with a financial institution that bears interest. Savings accounts offer less access to the account holder's funds than a checking account would, but they offer much easier access to those same funds than most other investment products. Read more about Savings Account.
A second mortgage means taking out a mortgage while already having one. You will receive cash or a line of credit based on the value of your home, and the amount of your first mortgage. Read more about Second Mortgage.
Secured and Unsecured Loans
Secured and Unsecured Loans are the two basic kinds of loans. Secured Loans are loans backed by collateral pledged by the borrower. Unsecured Loans are loans with no collateral. They are issued solely on the creditworthiness of the borrower. Read more about Secured and Unsecured Loans.
Subprime lending refers to loans that have a higher interest rate than standard loans. They are generally offered to borrowers who have poor credit or are otherwise deemed less likely to repay the loan. Read more about Subprime Lending.
A tax refund refers to the money a taxpayer receives when they have overpaid the IRS. This occurs when the money taken directly from your paycheck, called 'withholding tax,' adds up to more than your tax liability for the year Read more about Tax Refund.
A tax refund refers to the money a taxpayer receives when they have overpaid the IRS. This occurs when the money taken directly from your paycheck, called ‘withholding tax,’ adds up to more than your tax liability for the year. Read more about Tax Relief.
Taxes are fees that you pay to the government. We pay tax on the income we make, as well as goods and services that we buy. Taxes are used to fund our government and provide public services. Read more about Taxes.
The term of a loan is the pre-determined amount of time before the loan must be paid back in full, plus interest. Term can also refer to the conditions under which a loan is made, including the interest rate, monthly payment amount, and associated fees or penalties. Read more about Term.
Title Loans are a type of short-term, secured loan that uses the title of the borrower’s vehicle as collateral. Title lenders offer borrowers a loan based on a percentage of their vehicle’s value in exchange for the title. If the borrower is unable to repay the loan, the lender is legally allowed to seize and sell the vehicle. These loans come with very high interest rates and fees that average 300% annually. Read more about Title Loans.
Variable rates are interest rates that change periodically over the life of a loan. The rate can go up or down based on market conditions.