Glossary
Credit terms, explained simply
The vocabulary of financing can seem technical. This glossary brings together the definitions of terms you will encounter during your project.
A – F
- Outstanding capital
- The outstanding capital is the portion of the borrowed amount that remains to be repaid, excluding interest.
- Consumer credit
- A category of credit granted to individuals by banks or finance companies to fund purchases of goods and services, such as equipment (car, household appliances).
- Property loan
- A long-term loan from a credit institution, intended to finance all or part of a property purchase, construction or renovation work.
- Revolving credit
- A line of credit made available to the borrower, often linked to a card, granted to fund any cash need without justification of fund use. It renews, up to the set limit, as repayments are made.
- Debt
- An obligation that a person, the debtor, must fulfil in favour of another, the creditor. Most often, this involves paying a sum of money.
- Loan term
- A fixed or variable term set out in the contract. Variation may result from an interest rate revision, deferral or voluntary modulation of the instalment by the borrower.
- Instalment
- The amount of the payment (monthly, quarterly, etc.) that the borrower must make under their credit, on the date specified in their loan offer.
- Indebtedness
- The total of what a household owes: the sum of claims held on that household by other economic agents.
- FCC
- The Central Cheque File, managed by the Banque de France, centralises banking bans issued following the issue of a bounced cheque, as well as card withdrawals for abusive use. It is accessible to all banking and financial institutions.
- FICP
- The Personal Credit Incident File, managed by the Banque de France, records payment incidents related to credit granted to individuals.
- Brokerage fee
- Commission received by a credit brokerage firm or banking intermediary, in remuneration for the research, steps and negotiations carried out on behalf of its clients in seeking a loan.
- File fee
- Costs incurred by the lending institution for the study and implementation of the financing, paid by the borrower.
G – L
- Mortgage
- A deed by which the debtor grants the creditor a right over a property, without relinquishing possession. In the event of non-payment, the creditor may seize the property and be paid in priority.
- Banking ban
- A prohibition on issuing cheques imposed on a natural or legal person who issues a bounced cheque that is not regularised.
- Neiertz Act
- Law of 31 December 1989 on the prevention and resolution of difficulties related to personal over-indebtedness.
- Scrivener Act
- A law on consumer information and protection in credit transactions. It regulates the preliminary loan offer and advertising in consumer credit (law of 10 January 1978) and property credit (law of 13 July 1979), and introduces a reflection period and a withdrawal period.
M – R
- Monthly payment
- The monthly payment is broken down into a capital repayment portion and an interest payment portion.
- Amount outstanding
- The amount owed by the borrower under a credit at a given point in time. It mainly consists of the outstanding capital, deferred or rolled-over interest, and ancillary costs (insurance, for example).
- Notary
- A ministerial officer holding a practice and thereby holding a monopoly on the drafting and authentication of certain civil deeds: property sales, marriage contracts, wills, etc.
- Mortgage loan offer
- A document setting out the characteristics of the credit or loan buyback transaction proposed to the client: amount, rate, term, guarantee, conditions precedent, etc. The client and any guarantors must return the offer after a legal minimum reflection period of 10 days from receipt. The lender must maintain the offer conditions for a minimum of 30 days.
- Fixed-rate loan
- A loan whose interest rate is fixed for the entire term. The instalment amount is set and known in advance until the end of the loan.
- Property loan
- Or mortgage loan. A loan granted to finance the acquisition of a primary or secondary residence, or major renovation work on either.
- Consumer loan buyback
- Consolidation, grouping or restructuring of all short- or medium-term debts: renovation loan, personal loan, revolving credit, cash reserve, etc.
- Mortgage ratio
- The ratio between, on one hand, the amount to be financed plus the outstanding capital of mortgage loans retained, and, on the other, the value of the property given as collateral.
- Disposable income
- The amount remaining for the household to live on after deducting rent charges and loan instalments.
S – Z
- Over-indebtedness
- A situation characterised by a high debt ratio and multiple payment incidents and legal proceedings. It refers to the lasting inability of a household to meet its current expenses and loan repayments.
- Amortisation schedule
- A document attached to the loan offer showing, after each instalment, the outstanding capital owed by the borrower, as well as the capital and interest portion of each monthly payment and the insurance premium amount. It does not apply to variable-rate loans.
- Fixed rate
- The interest rate and the instalment amount are set at the time of signing the contract, for the entire loan term. The cost of borrowing is thus measurable with certainty.
- APR
- The Annual Percentage Rate is the total cost of credit expressed as an annual percentage of the loan amount. Calculated from the nominal rate, it includes all compulsory costs payable by the client: file fees, insurance premiums, mortgage costs, etc. It must always be below the legal usury rate.
- Cash release
- An additional sum granted to the borrower as part of a loan buyback transaction, intended to finance future projects or build a precautionary reserve.
- Market value
- The value that can be obtained through the interplay of supply and demand under normal market conditions, taking into account the economic context surrounding the asset.
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