.png)
We developed this glossary to help Australian borrowers understand the key terms they will see when researching or applying for a personal loan. Personal loans can be unsecured or secured, and they are offered by banks, credit unions, and non-bank lenders.
By providing both the formal definition and simple explanations, this guide makes the language of lending more accessible. Whether you are exploring a car repair loan, a holiday loan, a payday loan, or a standard unsecured loan, this resource can serve as your reference point.
Formal definition: A person using money that has been loaned to them by a lender.
Simple explanation: You, the person taking out the loan and agreeing to repay it.
Formal definition: An individual or institution to whom money is owed.
Simple explanation: The bank, credit union, or non-bank lender providing the loan.
Formal definition: A person who borrows money jointly with another borrower, with equal responsibility for repayment.
Simple explanation: If you and your partner take a loan together, both of you are equally responsible for paying it back.
Formal definition: A low-value credit contract, generally for 2 to 7 years, which may be secured or unsecured and used for personal purposes.
Simple explanation: Money you borrow for personal expenses like renovations, holidays, or medical bills, usually repaid in regular instalments.
Formal definition: A loan backed by an asset provided as collateral. The lender may repossess this asset if the borrower defaults.
Simple explanation: A loan guaranteed by something you own, such as a car. If you do not repay, the lender can take that asset.
Formal definition: A loan not tied to any collateral, generally carrying a higher interest rate.
Simple explanation: A loan based on your credit record and income, without property used as security.
Formal definition: An asset pledged by a borrower as security for a loan.
Simple explanation: Something valuable, like your car, that the lender can claim if you fail to repay.
Formal definition: The act of a lender taking possession of secured property due to borrower default.
Simple explanation: When the lender takes back your asset, like a car, because you stopped making repayments.
Formal definition: The face-value amount of a loan on which interest is calculated.
Simple explanation: The original amount you borrowed, before interest or fees are added.
Formal definition: The agreed period of time over which the loan must be repaid.
Simple explanation: The length of your loan – for example, 5 years.
Formal definition: A structured plan of repayments outlined in the loan contract.
Simple explanation: The timetable showing how much you need to pay and how often.
Formal definition: The annual percentage charged by the lender for borrowing money.
Simple explanation: The cost of borrowing, expressed as a yearly rate.
Formal definition: An interest rate that remains unchanged for a specified period.
Simple explanation: Your repayments stay the same during the fixed term.
Formal definition: An interest rate that can fluctuate during the loan term.
Simple explanation: Your repayments may change if market rates go up or down.
Formal definition: A percentage figure including the interest rate plus most fees, designed to show the true cost of a loan.
Simple explanation: A rate that helps you compare loans fairly because it includes fees as well as interest.
Formal definition: A large lump-sum payment required at the end of a loan term.
Simple explanation: A big final payment at the end of the loan that makes regular repayments smaller but requires you to pay more at once later.
Formal definition: A one-off fee charged by the lender to set up the loan.
Simple explanation: An upfront cost you pay when the loan is created.
Formal definition: A recurring fee for managing the loan account.
Simple explanation: A regular fee, often monthly, that adds to the overall cost.
Formal definition: A penalty fee charged for failing to make a repayment on time.
Simple explanation: A charge you pay if you miss a repayment.
Formal definition: A fee charged if you repay or refinance the loan before the agreed term ends.
Simple explanation: A penalty for paying off your loan early.
Formal definition: The process of combining multiple debts into a single new loan.
Simple explanation: Rolling several debts into one loan to simplify payments.
Formal definition: Replacing an existing loan with a new loan, usually at a lower rate or with different terms.
Simple explanation: Swapping your old loan for a new one to save money or change the repayment structure.
Formal definition: A payment arrangement allowing automatic deductions from a bank account.
Simple explanation: A system where repayments are automatically taken from your account.
Formal definition: A record maintained by a credit reporting agency showing your credit history.
Simple explanation: A report that shows how well you have managed loans and credit in the past.
Formal definition: A numerical rating summarising creditworthiness based on credit history.
Simple explanation: A number that shows lenders how reliable you are at repaying money.
Formal definition: A short-term loan of up to $2,000, repayable between 16 days and 1 year, subject to fee caps under Australian law.
Simple explanation: A very short loan often used for emergencies, but with high fees that make it expensive.
Formal definition: Legal obligations under the National Consumer Credit Protection Act requiring lenders to ensure that credit contracts are suitable for borrowers.
Simple explanation: Rules that make lenders check you can afford a loan before approving it.
Formal definition: A request made under the National Credit Code to change loan terms if a borrower is experiencing financial difficulty.
Simple explanation: Asking your lender to adjust your repayments if you are struggling due to events like job loss or illness.
It is a loan that does not require any asset as security. Approval is based on your income, expenses, and credit history.
Yes. Without collateral, lenders take on more risk, so unsecured loans usually have higher interest rates.
In Australia, unsecured personal loans typically range from $2,000 to around $50,000, depending on your profile.
Yes. Borrowers commonly use them for car repairs, medical bills, holidays, home improvements, or debt consolidation.
Since there is no asset to repossess, the lender may pursue legal action, report the default to credit bureaus, or engage debt collectors. This can harm your credit score.
Yes. On-time repayments can help improve your score, while late or missed payments will damage it.
.png)
Disclaimer
CashLend, a trading name for Simple Finance Group Pty Ltd (ABN 70 626 186 418) and holder of Australian Credit License 509422, operates as a lender and referral service. We do not endorse any specific credit contract. Upon receiving an offer or referral to a lending partner, they will evaluate your application, provide a suitable credit contract, and inform you of the outcome. Both we and our lending partners will disclose all fees, charges, and terms before any contract is entered into. We may receive a referral fee, the amount of which is not determinable. We advise seeking independent legal and financial counsel before engaging in any financial products. The rates and loan terms provided on this website are for indicative purposes only. CashLend, as a lender, may process applications within 60 minutes, and loan disbursement may occur immediately upon contract signing. However, the timing of fund disbursement depends on your banking institution's policies.
*Approved funds are transferred on the same day, subject to approval during business hours and completion of all required documentation including Payto bank agreements. Transfer times may vary depending on your bank’s processing times. Not all banks support instant deposits, and some transactions may take longer to reflect in your account.