A line of credit is a type of loan that allows a borrower to access a certain amount of funds from a lender, up to a pre-approved limit. The borrower can borrow and repay funds as needed and interest is typically only charged on the actually utilised. For instance, say you get a line of …
Post Type Archives: Glossary
Liquidation
Liquidation means the sale of assets of a company to raise capital and pay off debt, such as to shareholders or creditors. Liquidation may be voluntary when a company is shutting its business, or compulsory when it is forced to shut down its business due to insolvency.
Liquidity
Liquidity refers to the ability of an asset or investment to be easily converted into cash or be used to make payments. High liquidity means that an asset can be quickly bought or sold without significantly affecting its price. Liquid assets usually come with a short maturity tenure and a low risk profile and include: …
Loan Agreement
Wondering what is a loan agreement? This document is a crucial contract that defines the financial terms and conditions between a borrower and a lender. A loan agreement contains important information relating to the: Loan amount Repayment tenure Interest rates and other charges applicable such as late fees, processing fees and more Repayment schedule and …
Loan Amortisation
Wondering what is loan amortisation? It refers to a repayment schedule where you, as a borrower, make regular payments towards your loan, covering both a portion of the accrued interest and the principal amount you owe. In an amortised loan, a larger part of your repayment instalment goes towards interest payment and a smaller portion …
Loan Rate
The loan rate is nothing but the rate of interest. It is also called the lending rate. The loan rate applies to a loan during repayment, where you as the borrower not only repay the principal or loan amount you have borrowed, but also the interest due to the lender. The loan rate is thus …
Lock-In Period
What is the Lock-In Period? It is the minimum duration during which you cannot sell or withdraw an investment. Most schemes have a specific timeline, which varies with different investments and providers. Remember, the lock-in period differs from the investment tenure. Here’s what you must know: Lock-In Periods for Different Investments Following are the lock-in …
Mandate
What is a Mandate? A mandate is any official order or instruction that gives authority to the receiver to facilitate service. It is usually used in the context of banking, where a mandate helps to make recurring payments at a particular date to a specific business or entity. Launched by the RBI and the National …
Margin
Margin is the difference between the selling price and the cost of producing or providing a product or service. It is often expressed as a percentage and represents the profit margin or markup.For example, a retailer may sell a product at a 20% margin, which means that the selling price is 20% higher than the …
Marginal Rate
What does it mean? Marginal Rate or the marginal tax rate refers to the percentage of your taxable income above a certain defined threshold. It is only applied for each tax bracket that you qualify for. The more income you make, the more taxes you owe as it is simply a percentage of your actual …