• What is an APR?
APR stands for 'Annual Percentage Rate' & the figure represents the amount of interest you will be charged by a lender as a yearly percentage. Interest is the charge that you have to pay on borrowed amounts, it is a way of paying the lender for their services. Lenders are required by law to disclose the APR. APR is charged at both fixed & variable rates. A fixed rate interest will not be affected by external changes & represents the stock annual percentage rate of the finance charge. Variable rate programs are affected by indexes (economic indicators) & will fluctuate accordingly, charged according to the prime rate & an added percentage. If you are applying for a variable rate credit card then ask your credit card provider how they determine that rate & according to which index. There may well be limitations set on how much & how often a variable rate can change.

• What is a debt consolidation?
Debt consolidation is a way in which you can avoid bankruptcy & destroying your credit rating entirely. Companies that offer debt consolidation services will combine (or 'consolidate') your arrears into one lump sum. You will pay one monthly sum that the debt consolidators will then dispense variously to your creditors. Debt consolidation professionals will negotiate with creditors to help you get better repayment terms & lower interest rates. These companies aim to help you get out of debt faster than you would on your own & can help stop you going under completely.

• What is a loan?
A loan is, on its most basic level, an arrangement between lender & borrower where the lender provides the borrower with money or property & the borrower promises to return it at a later date, usually along with some interest. Loans comprise two parts- the amount borrowed & the interest. Interest represents the charge the lender imposes for the services they provide, it is also called APR & is expressed as an annual percentile of the total amount borrowed.

• What is a student loan?
Student loans are the most popular form of financial aid used by college students. As a college student you can get hold of both subsidized & unsubsidized loans. Subsidized loans are funded in part by the Federal Government & you will simply pay back the money you have borrowed, without any interest. Unsubsidized student loans work like any other borrowed finances, & you will have to pay back the interest on the loan as well as the money originally borrowed. All student loans must be paid back in full regardless of whether or not the student actually graduates.

• What is a payday loan?
A payday loan is short-term loan that is deposited directly into your checking account, usually within 24 hours. At an agreed time the money that you have borrowed will be removed from your account in addition to the charge that the loans company imposes upon you. The service fee will be dependent upon the size of the loan & your credit history. For a further fee you will usually be allowed to extend your loan. Payday loans are also often referred to as bridging loans & can be useful for those mid-month times when cash is tight & you have bills to pay.

• What is a personal loan?
A personal loan is an unsecured loan lent to individuals. It is not guaranteed by any collateral & for this reason they usually have higher interest rates than other types of secured loans. Personal loans can be obtained for pretty much any purpose- you might want a personal loan to fund that holiday you've been dreaming of, to redecorate the house or simply to cover unexpected bills.

• What is a mortgage?
A mortgage is a sum of money borrowed from a bank or other lender for the purpose of purchasing. The property itself is used as security against the loan. When you apply for a mortgage you will agree to pay back your loan over a fixed period of years, usually in monthly installments.

• What is a home equity loan?
A home equity loan, also commonly referred to as a second mortgage, is a popular form of financing where your home is put down as collateral & security for the loan. This means that your home is at risk if you do not keep up repayments, but can enable you to procure more favorable interest rates & also tax benefits. The interest on a home equity loan is tax-deductible up to $100 000; other loans offer no such benefits. With a home equity loan you will borrow a lump sum of money & agree to pay it back over a fixed term of years with either a fixed or variable interest rate. A second mortgage works in just the same way as a regular mortgage

• What is an auto loan?
Auto loans are loans provided for the purpose of purchasing a vehicle. Often your car dealer will try & provide you with auto financing but cheaper rates are far more likely to be found elsewhere. You can be pre-approved for an auto loan before you even start looking for your car. Often this is the wisest way to act as you know all your options & spending limits right from the start.

• What is a secured loan?
A secured loan is a loan that requires you to put up some kind of collateral as security for the loan repayment. Most commonly this will be your property, & your home will be at risk if you fail to keep up repayments. As secured loans present lower risks to the lender you will usually be rewarded with lower interest rates on a secured loans.

• What is an unsecured loan?
An unsecured loan is a sum of money that can be borrowed from any lender. Unsecured loans are not tied to anything & for this reason the interest rates charged on them are slightly higher. If you apply for a USA unsecured loan then you will receive a sum of money which you will be required to repay, usually in monthly installments. Different lenders have different repayment options so check with your USA loan company about the options they provide.