Glossary: Australian Business & Personal Finance Terms
Plain-English definitions of the terms Australian borrowers run into most often - on loan contracts, in lender emails, and from brokers who forget not everyone speaks finance. Jump to a term, or read start to finish.
APR (Annual Percentage Rate)
APR is the yearly cost of a loan expressed as a percentage, used mainly in the US and UK. In Australia, the closest equivalent most borrowers will see is the comparison rate.
Balloon Payment (Residual Payment)
A balloon or residual payment is a lump sum still owing at the end of a loan term, common on car and equipment finance. It lowers your regular repayments but does not remove the cost - it just delays part of it.
Chattel Mortgage
A chattel mortgage is a business loan where you own the vehicle or equipment from day one, while the lender holds a mortgage over it as security until the loan is repaid.
Comparison Rate
A comparison rate combines a loan's interest rate with most standard fees into one annual percentage, making it easier to compare consumer loans on a like-for-like basis.
Credit Representative
A credit representative is a person or business authorised to engage in credit activities under someone else's Australian Credit Licence. loan-o (B.K Brokers Pty Ltd) operates as Credit Representative 550800 of COG Compliance Services Pty Ltd.
Debt Consolidation
Debt consolidation combines multiple debts - credit cards, personal loans, buy-now-pay-later - into a single loan with one repayment, usually to simplify cash flow or reduce overall interest.
Equipment Finance
Equipment finance is business finance used to purchase machinery, vehicles or tools, usually structured as a chattel mortgage, lease or hire purchase depending on how the business wants to treat ownership and tax.
Establishment Fee
An establishment fee is a one-off, upfront charge a lender applies to set up a loan. It is included in the comparison rate calculation for most consumer loans but is charged separately from the interest rate.
Exit Fee (Early Payout Fee)
An exit or early payout fee is charged if you pay out or refinance a loan before the end of its term. It can turn what looked like the cheaper loan into the more expensive one if you refinance early.
Guarantor (Personal Guarantee)
A guarantor personally promises to repay a loan if the borrower cannot. For business finance, lenders often require a director's personal guarantee, which puts the director's personal assets at risk if the business defaults.
Hire Purchase
A hire purchase agreement lets a business use an asset while paying it off in instalments, with ownership transferring only once the final payment (and any balloon) is made - unlike a chattel mortgage, where ownership starts immediately.
Invoice Finance (Factoring)
Invoice finance (also called factoring or debtor finance) lets a business borrow against the value of its unpaid invoices, releasing cash tied up in accounts receivable instead of waiting the full payment term.
Line of Credit
A line of credit is a flexible facility that lets you draw funds up to an approved limit as needed, repay, and redraw again - you only pay interest on what you have actually drawn, not the full limit.
LVR (Loan-to-Value Ratio)
LVR is the loan amount expressed as a percentage of the value of the asset or property securing it. A lower LVR generally means less risk for the lender and can mean better rates or terms for the borrower.
Novated Lease
A novated lease is a three-way arrangement between an employee, employer and financier where vehicle lease payments are deducted from the employee's pre-tax salary, with the employer taking on the lease obligation while the employee is with the company.
Secured Loan
A secured loan is backed by an asset - property, a vehicle, equipment - that the lender can repossess if repayments are not made. Because the lender's risk is lower, secured loans usually carry lower rates than unsecured finance.
Trade Finance
Trade finance funds the gap between paying a supplier and receiving payment from a customer, commonly used to cover import, export or purchase-order costs without draining working capital.
Unsecured Loan
An unsecured loan has no specific asset backing it, so approval relies more heavily on credit history, income and business performance. Because the lender carries more risk, rates are usually higher than secured finance.
Working Capital
Working capital is the cash a business has on hand to cover day-to-day operating costs - wages, stock, rent - after short-term liabilities are accounted for. Working capital finance exists specifically to top this up without touching long-term assets.
Finance is subject to lender approval, lending criteria, terms, conditions, fees and charges. The information on this page is general and does not take into account your personal or business needs. It is not personal financial, tax or legal advice.
Last reviewed: 1 September 2026. This glossary is prepared using information available from the Australian Securities and Investments Commission, Moneysmart, and the National Consumer Credit Protection Act 2009. It provides general information only.
Yes. Every definition here reflects how the term is used in Australian consumer and business lending, which can differ from US or UK usage (APR versus comparison rate, for example).
Both. Terms are drawn from across loan-o's business finance (equipment, trade, invoice, working capital) and personal finance (car loans, personal loans, debt consolidation) products.
Yes. Send us the term or the contract clause it came from and a loan-o specialist will explain it in plain English, free and with no obligation.
Yes. This is a living page - we add new terms as they come up in real borrower questions, so check back or ask us to add one.
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