Some financial terms can seem like another language. To help you make sense of them, here are the most common terms and concepts explained in plain English.

Amortisation The repayment of debt by a series of instalments. This also applies to the gradual reduction over time of the principal of a bond or mortgage.
Asset & Liability Statement (A&L) A statement which outlines all assets you own eg property, car, shares and all loans, or liabilities you have which may be unsecured or secured against your assets.The balance when you subtract your total liabilities from the total value of your assets is sometimes referred to as your Net Asset Position.
Balloon (also refer Residual) The final balance due at the end of a loan agreement. This amount is agreed to at the beginning of the loan and is included in the loan agreement and calculation schedule.
Capitalised Interest Interest not paid, it is added to the outstanding loan debt.
CHP (Commercial Hire Purchase) Medfin buys the equipment and you make loan repayments, purchasing it progressively from us. When you have made your final repayment, you own the equipment.
Depreciation The reduction in the value of an asset. An asset “depreciates” in value over its lifetime.
Financials When applying for a loan you may be requested to supply your “financials”. Financials can include items such as: Profit & Loss Statement (P&L), Balance Sheet, Tax Returns, Asset & Liability Statement (A&L).
Funding Notice A form that is part of the Draw Down Facility that is signed to request/authorise payment of an invoice.
Interest Only (I/O) Loan payments cover the interest charge only.
Joint & Several Guarantee Guarantors are not only jointly liable, but also personally liable for thewhole debt.
Limited Guarantee The amount a guarantor is responsible for is limited to an agreed sum.
LVR (Loan Value Ratio) Ratio of the loan amount to the value of the property.
A lease document which allows for future leases to be funded via a simple document which is only signed by persons nominated on the Master. Often used for group practices.
Master Limit A lease or loan document which allows for a pre-approved lending limit to be in place for a customer. This limit allows for future leases/loans to be funded without the requirement of approval for each new lease/loan.
Novated Lease A lease agreement is put in place between you and Medfin. A Novated agreement is signed by your employer noting that the employer agrees to pay the lease on your behalf. This agreement terminates when your employment terminates. You are then responsible for payments of the lease. There may be tax benefits for you, if your employer pays the lease repayments.
NPV (Net Present Value) Today’s value of a future amount, before interest earnings/charges.
Principal Amount borrowed.
Principal & Interest (P&I) Loan payments cover the interest charge and reduction of the principal.
Quantity Surveyor (QS) An expert who estimates and monitors construction costs, from the feasibility stage of a project through to the completion of the construction period. Their role may also include cost planning, value engineering, feasibility studies, cost benefit analysis, lifecycle costing, valuation and cost estimation.Employed predominantly on major building and construction projects as consultants to the owner.Medfin employs a practicing QS as an independent contractor to perform, in general, the role of cost control on construction projects.
Residual (also refer Balloon) Final balance due at the end of a lease agreement. This amount is agreed to at the beginning of the lease and is included in the lease agreement. Payment of this residual is an offer to purchase the asset from the lessor.
Structured Lease Where the lease payments are structured eg1 payment in the first month, followed by nil repayments for 6 months, followed by regular monthly repayments.Structured leases may offer you tax savings.
Unsecured A debt is unsecured if there is no collateral that is security for the debt. An unsecured loan is an obligation backed not by collateral but only by the integrity of the customer. Ie A car loan may be secured against the car you purchased with the borrowed funds.

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