Terminology is an important part of every subject that you learn. It is important in learning about finances too. Here are a few standard lending terms that will help you when taking out a loan.
APR stands for Annual Percentage Rate. The APR is the interest rate charged on your loan. This figure takes into account not only the interest payable over the term of the loan but also any other related charges or fees. As such it’s the best measure for comparing the cost of borrowing from one lender to another.
Principal is the original amount of a debt or investment on which interest is calculated. In terms of borrowing, this is the amount of money borrowed.
Term is the pay back period, or the amount of time you have to repay the loan. For a car, this may be as much as 5 or 6 years. For a house, the time to repay may be up to 30 years.