FINANCE TERMS
EXPLAINED

Acceptance Fee

A fee charged by some lenders to cover their administrative costs when processing a loan application. Not all lenders charge this fee. Where it applies it may be included in the monthly repayments or added at the beginning of the finance agreement.

Annual Percentage Rate (APR)

The yearly cost of borrowing expressed as a percentage. The APR is typically higher than the flat interest rate because it factors in additional elements such as fees, the loan term and loan amount. It gives a more accurate picture of the total cost of a loan.

Asset Finance

A type of finance used to purchase physical assets such as vehicles, equipment or machinery. The asset itself is typically used as security for the loan. Asset finance includes car loans, equipment finance, chattel mortgages and leasing arrangements.

Australian Financial Complaints Authority (AFCA)

An independent and impartial dispute resolution scheme for financial services complaints in Australia. Volt Loans is a member of AFCA. If you have a complaint that cannot be resolved directly with us, you can escalate it to AFCA at no cost to you.

Balloon Payment

A lump sum payment due at the end of a loan term. Structuring a loan with a balloon payment reduces your regular repayments during the loan. At the end of the term you can pay the balloon in full, refinance it, or in some cases return the asset to the lender. Also known as a residual value in some loan types.

Break Fee

A fee charged by some lenders if you pay out your loan before the agreed term ends. Not all lenders charge break fees. It is important to understand the early repayment conditions of any loan before you sign.

Chattel Mortgage

A type of business finance where the lender takes a mortgage over the asset being purchased. The borrower owns the asset from day one but the lender holds security over it until the loan is repaid. Commonly used for vehicles and equipment purchased for business use and may offer GST and tax advantages for eligible businesses.

Comparison Rate

A standardised rate that combines the interest rate with most fees and charges into a single percentage figure. It gives a more accurate picture of the true cost of a loan than the advertised interest rate alone. When comparing loans always look at the comparison rate alongside the interest rate.

Credit Score

A numerical rating of your creditworthiness based on your borrowing and repayment history. Lenders use your credit score as one of the factors in assessing your loan application and determining your interest rate. A higher score generally means access to better rates and more lender options.

Default

A borrower is in default when they fail to meet the repayment obligations of their loan agreement. Defaulting on a loan can result in the lender repossessing the asset used as security and can significantly damage your credit score.

Deposit

An upfront payment made toward the purchase of an asset, reducing the amount that needs to be financed. Some loan products require a minimum deposit while others such as certain rideshare driver loan options offered by Volt Loans may allow 0% deposit for qualifying borrowers.

Equity

The difference between the current market value of an asset and the amount still owed on any finance secured against it. As you pay down a loan and the asset retains value, your equity in that asset grows.

Establishment Fee

A one-off fee charged by some lenders to set up a loan. Also known as an application fee or origination fee. Not all lenders charge this. Volt Loans will always be transparent about any fees before you proceed.

Finance Broker

A licensed intermediary who arranges finance on behalf of borrowers by searching across multiple lenders to find the most suitable loan. A finance broker works for the borrower rather than for any single lender. Volt Loans is a licensed finance broker operating under Australian Credit Licence No. 384704.

Finance Brokers Association of Australia (FBAA)

The peak industry body for finance brokers in Australia. FBAA membership requires brokers to meet strict professional standards and comply with the FBAA Code of Practice. Volt Loans is a proud FBAA member.

Fixed Interest Rate

An interest rate that remains the same for the life of the loan, regardless of changes in the broader market. A fixed rate gives you certainty about your repayment amount for the loan term. Most asset finance in Australia is offered at a fixed rate.

Guarantor

A person who agrees to be responsible for a loan if the primary borrower is unable to meet their repayments. Having a guarantor can help borrowers with limited credit history or lower income qualify for finance. Taking on a guarantor role is a significant financial commitment and should be considered carefully.

GVM (Gross Vehicle Mass)

The maximum loaded weight of a vehicle as specified by the manufacturer, including the vehicle itself, passengers, cargo and any towing equipment. A GVM upgrade, such as those included in the Volt Loans Tiger Shark pack, legally increases the payload capacity of a vehicle.

Interest Rate

The percentage of the loan amount charged by a lender for the use of their money, expressed as an annual rate. The interest rate is one component of the total cost of a loan. Always compare the comparison rate as well as the interest rate when assessing loan options.

Lender

A financial institution or organisation that provides funds to borrowers in exchange for repayment with interest. Volt Loans works with over 70 trusted Australian lenders to find the most competitive rates for our clients.

Loan Term

The agreed length of time over which a loan is repaid. Common loan terms for asset finance in Australia range from one to seven years. A longer term means lower monthly repayments but higher total interest paid over the life of the loan.

Low Doc Loan

A loan product designed for self-employed borrowers or business owners who cannot provide the full financial documentation required by standard loans. Low doc loans typically require less paperwork but may carry a slightly higher interest rate to reflect the additional risk to the lender.

Novated Lease

A salary packaging arrangement where an employer makes lease payments on an employee's vehicle from their pre-tax salary. This can reduce the employee's taxable income. A novated lease is a three-way agreement between the employee, employer and finance company. Note that Volt Loans does not currently offer novated lease products.

Pre-Approval

A conditional approval from a lender indicating how much you can borrow, issued before you have finalised which asset you are purchasing. Pre-approval gives you a clear budget when shopping and allows you to move quickly when you find the right vehicle or asset.

Principal

The original amount borrowed before interest and fees are added. Each repayment you make reduces the principal, with the remainder going toward interest. Over time as the principal reduces, a greater proportion of each repayment goes toward the principal rather than interest.

Refinancing

The process of replacing an existing loan with a new loan, typically to obtain a lower interest rate, reduce monthly repayments or change the loan term. Volt Loans can assess your current loan and compare it against what is available in the market to determine whether refinancing would benefit you.

Repayment

A scheduled payment made to a lender to gradually pay off a loan. Repayments can be structured as weekly, fortnightly or monthly depending on the lender and loan product. Each repayment covers a portion of the principal and the interest charges for that period.

Residual Value

The agreed value of an asset at the end of a finance term, particularly in leasing arrangements. Similar to a balloon payment, a residual value reduces regular repayments during the loan term. At the end of the term the borrower can pay the residual, refinance it or return the asset.

Secured Finance

A loan where an asset is used as collateral or security for the lender. If the borrower defaults the lender can repossess and sell the asset to recover the outstanding debt. Secured loans typically offer lower interest rates than unsecured loans because of the reduced risk to the lender.

Settlement

The final stage of the loan process where the funds are transferred to the seller and the loan officially commences. Once settlement occurs the borrower takes ownership of the asset and repayments begin as scheduled.

Unsecured Finance

A loan that is not secured against an asset. Approval is based on the borrower's credit profile and financial position rather than an asset offered as collateral. Unsecured loans typically carry higher interest rates than secured loans but offer more flexibility, particularly for older vehicles or assets that some lenders will not accept as security.

Variable Interest Rate

An interest rate that can change during the life of a loan in response to movements in market interest rates. Variable rate loans can result in repayment amounts changing over time. Most asset finance in Australia is offered at a fixed rate rather than variable.