UNDERSTAND
Credit glossary
The words we use, explained simply. If a term on this site is unclear, it is here.
Credit glossary
- Annual percentage rate (APR)
- [Definition to be validated by compliance. The APR expresses the total cost of a loan as an annual percentage: it includes the nominal rate, arrangement fees and any sum required to obtain the loan. It is the only rate that allows two offers to be compared.]See also: Nominal rate, Arrangement fee, Repayment term
- Arrangement fee
- The amount charged once for reviewing and setting up the loan, expressed as a percentage of the amount borrowed. It enters the calculation of the annual percentage rate, and must therefore appear in any comparison.See also: Annual percentage rate (APR)
- Blocked savings
- Savings you undertake to leave in place for an agreed period. In exchange for that commitment, they earn more than savings you can withdraw at any time. Withdrawing before the term forfeits all or part of the interest: ask for the exact rule before opening the account.See also: Term deposit, Credit interest rate, Minimum balance
- COBAC
- [Definition to be validated by compliance. Central African Banking Commission, the authority that supervises banks and microfinance institutions in the six CEMAC countries. It sets prudential rules and checks that they are applied.]See also: Microfinance institution (MFI)
- Credit interest rate
- What the institution pays you each year on the money you leave in a savings account, as a percentage of the amount saved. Not to be confused with the nominal rate, which is what you pay on a loan. A savings account pays 4 % a year, a locked savings account 6 %.See also: Nominal rate, Term deposit
- Early repayment
- Settling a loan before the last scheduled instalment. The amount to pay is the outstanding principal, not the sum of the remaining instalments: those contain interest you will no longer owe. Ask the branch for that figure, and for any fee, before paying.See also: Principal, Monthly payment
- Microfinance institution (MFI)
- [Definition to be validated by compliance. An institution licensed to collect savings and grant loans to people and businesses that conventional banks do not serve. MFIs are classified into categories according to the operations they may carry out, and are supervised by COBAC.]See also: COBAC
- Microloan
- A small loan, meant to start or grow a business, granted to people whom conventional banks do not fund for lack of security or banking history. It is the founding trade of microfinance.See also: Security, Annual percentage rate (APR)
- Minimum balance
- The amount that must remain in the account at all times. It is not a fee: it stays your money and you get it back when you close the account. It varies by account, from 2,500 FCFA for student savings to 30,000 FCFA for the company and association current account.See also: Passbook, Credit interest rate
- Monthly payment
- The amount paid each month to repay a loan. It always contains two parts: a principal part, which reduces your debt, and an interest part, which pays the lender. At the start, the interest part dominates.See also: Principal, Nominal rate, Repayment term
- Nominal rate
- The annual interest rate applied to the amount borrowed, excluding fees. It is always lower than the annual percentage rate, which adds mandatory charges. Comparing two loans on their nominal rate alone is the surest way to be misled.See also: Annual percentage rate (APR), Credit interest rate
- On demand and fixed term
- An on-demand account lets you withdraw your money whenever you want. A fixed-term account locks it for an agreed period and pays more in return. The collection account exists in both forms.See also: Term deposit, Credit interest rate
- Outstanding total
- The total of sums outstanding at a given date. For deposits, it is what the institution holds on behalf of its clients; for loans, it is what all borrowers still owe. An outstanding total means nothing without the date it was struck on, nor without its unit.See also: Principal, Term deposit
- Overdraft
- Permission to withdraw more than your account holds, up to an agreed ceiling, to meet an unexpected expense. It is not free money: it is a short loan, which must be repaid and which costs interest.See also: Annual percentage rate (APR)
- Passbook
- The booklet issued when you open a collection account, in which every deposit and withdrawal is written by hand and signed. It costs 500 FCFA, and it is the only opening charge on that account. It is your proof: keep it.See also: On demand and fixed term
- Principal
- The amount actually borrowed, excluding interest and fees. The outstanding principal is what you still have to repay at a given moment: it is the figure to ask for before settling a loan early.See also: Monthly payment, Early repayment
- Repayment term
- The time over which a loan runs, from the first to the last instalment. A long term lightens the instalment and increases the total cost; a short term does the opposite. It is the setting that changes the result the most in the calculator.See also: Monthly payment, Principal, Annual percentage rate (APR)
- Security
- What the institution can call upon if the loan is not repaid: an asset pledged, or another person's undertaking to pay in your place. It does not replace your ability to repay, it comes in addition.See also: Microloan
- Term deposit
- A sum placed for a period agreed in advance, which you undertake not to withdraw before the agreed maturity. In return for that commitment, the interest is guaranteed and higher than on an ordinary savings account.See also: On demand and fixed term, Credit interest rate, Blocked savings
These definitions are educational. They replace neither the contractual terms of your loan, nor the regulatory disclosures handed to you at the branch.