Definitions and Resources
Speedy Cash Financial Terms Glossary
We are clearly defining complex terms in a way that makes them easy for our customers to understand. Click on a term in this financial terms glossary to learn more.
Account
An account is a financial arrangement with a bank or other financial institution that allows individuals or businesses to deposit, withdraw, and manage their money. Common types of accounts include savings accounts, checking accounts, and investment accounts.
Annual Percentage Rate
Annual Percentage Rate (APR) is the total cost of borrowing money for one year. It includes the interest rate and any extra fees or charges you’ll pay. APR helps you compare loan offers and understand how much a loan really costs over time.
Autodeposit
A feature of Interac e-Transfer that allows money to go directly into a recipient’s bank account without answering a security question. Once set up through online or mobile banking, any funds sent to the registered email address or mobile number are deposited instantly.
Bank Statement
A bank statement is a summary of all the transactions in your bank account over a set period.
Borrower
A borrower is someone who gets money from a lender and agrees to pay it back later. If you need to borrow money for bills, groceries, or an emergency, you are a borrower.
Borrowing & Lending
Borrowing and lending play a major role in everyday money decisions for people across Canada. Lenders offer short-term options, including payday loans, that provide quick access to funds.
Chequing Account
A chequing account is a bank account used for daily spending. It lets people deposit money, take out cash, and make frequent payments. Most Canadians use a chequing account to cover regular costs like groceries, transportation, rent, and phone bills. It gives quick access to money, unlike a savings account, which is meant for later use.
Cost of Living
The cost of living is how much money you need to pay for everyday things like rent, groceries, transportation, and bills. It shows how expensive life is in a certain place.
Credit Building
This is the process of improving your credit score so you can get better loan offers, lower rates, and more approval options in the future.
Credit Report
A credit report is a record that shows how you’ve handled money you borrowed in the past. It tracks your loans, credit cards, missed payments, and more. Lenders use it to help decide if they’ll approve your loan.
Credit Score
A credit score is a number that shows how likely you are to pay back money you borrow. It helps lenders decide if they should give you a loan.
Debt
Debt means money you owe to someone else. When you borrow money and promise to pay it back later, you create debt. Many people in Canada have different kinds of debt, such as loans, mortgages, or credit card bills.
Default
A loan default happens when you don’t pay back your loan the way you agreed to in your loan terms. In simple words, you’ve missed too many payments, and the lender now considers your loan “in default.” It can hurt your credit and lead to extra fees or even legal action.
Direct Lender
A direct lender is a company that gives you a loan with no middleman. You apply directly with them, and they are the ones who approve your loan and give you the money.
Discretionary Income
Discretionary income is the money that is left after paying for essential expenses.
Disposable Income
The money a person has after paying taxes and mandatory deductions. This is often called “after-tax income” or “net pay.”
Emergency Expense
An emergency expense is an unexpected cost that needs fast attention. It is something that cannot wait. These expenses are not part of a regular monthly budget and often create pressure because they happen without warning. Some common examples include car repairs, medical bills, urgent home repairs, or replacing a broken appliance.
Emergency Fund
An emergency fund is money you set aside to cover sudden, unexpected expenses like car repairs, medical bills, or job loss.
Essential Expense
A cost that must be paid to cover basic needs for daily living. These include housing, utilities, groceries, transportation, and minimum payments on loans or bills.
50 30 20 Budgeting Rule
The 50-30-20 budgeting rule is a simple way to manage your money. You split your after-tax income into three parts: 50% for needs, 30% for wants, and 20% for savings or paying down debt.
Fixed Expenses
Fixed expenses are regular costs that do not often change. These bills usually come at the same time each month and stay the same amount. Common examples include rent, insurance premiums, car payments, and internet bills. Because the amount stays steady, it is easier to plan for fixed expenses than other types of bills.
Fixed Interest Rate
An interest rate is the cost of borrowing money. It’s shown as a percentage and tells you how much extra you’ll pay back on top of the money you borrowed.
Gross Income
Gross income is the total amount of money you earn before any taxes or deductions are taken out. This includes your salary, wages, bonuses, tips, and other money you earn throughout the year.
Household Expenses
These are the costs of running your home each month, such as rent, groceries, utilities, and transportation. These are also called monthly expenses.
Income Tax
Income tax is money you pay to the Canadian government from your earnings each year. The government uses this money to fund public services like healthcare, education, and roads.
Income Verification
Income verification means proving how much money you earn. Lenders ask for this to make sure you have a steady income and can repay the loan.
Inflation
Inflation is when the prices of everyday things—like food, rent, or gas—go up over time. It means your money doesn’t go as far as it used to. In Canada, this is called the Canada inflation rate, and it’s tracked to show how fast prices are rising.
Interac e-Transfer
A Canadian banking service that lets people send and receive money directly between bank accounts. It works through online or mobile banking and uses the recipient’s email address or mobile number to deliver funds.
Lender
A lender is a person or company that gives you money now and expects you to pay it back later. In Canada, a payday lender is a direct lender that offers small, short-term loans to people who need quick cash before the next payday.
Loan Agreement
A loan agreement is a written contract between a borrower and a lender that explains the rules of a loan.
Loan Eligibility
This means meeting the basic rules a lender has before giving you a loan. It’s how a lender decides if you can borrow money and how much money you are approved for that you will have to repay.
Loan Repayment
This means paying back the money you borrowed, plus any fees or interest. Repayment happens on a schedule, either all at once or over time, until the loan is fully paid off.
Loan Term
The set period of time given to repay a loan. The term outlines when repayment starts and when it ends.
Loan-to-Value Ratio
A loan-to-value ratio is a percentage that compares how much money you want to borrow to the value of an asset used as security for the loan. The asset could be a home, vehicle, or another item with measurable value. Lenders use the loan-
to-value ratio to understand risk. In simple terms, it shows how much of the asset’s value is being borrowed. The lower the loan-to-value ratio, the less risk the lender may see. A higher loan-to-value ratio usually means more risk for the lender.
Maturity Date
A maturity date is the date when a loan, investment, or financial agreement ends. On this date, any remaining balance must be paid in full or settled based on the terms of the agreement. The maturity date marks the official end of the contract. Some people also call this the agreement end date or repayment deadline
Mobile Banking
Mobile banking refers to using a smartphone or tablet to access and manage personal banking.
Negative Amortization
Negative amortization is a situation where your loan payment is not enough to cover all the interest owed.
Interest is the cost of borrowing money. Lenders charge interest based on how much you owe and how long you borrow. With negative amortization, the payment does not pay all the interest. The unpaid interest does not go away. It gets added to your loan balance.
This means the loan balance increases, even though you are making payments.
Net Income
Net income is the amount of money you have left after all your expenses, taxes, and deductions are taken out of your total earnings.
Online Banking
Online banking is a secure way to access bank accounts and manage money through a computer, tablet, or mobile device.
Online Lending
This is when you borrow money through the internet instead of visiting a physical store. You fill out an application online and, if approved, the money is sent to your bank account.
Personal Finance
A term used to cover the management of your money, including saving and investing. It also includes budgeting, banking, insurance, mortgages, investments, taxes, retirement planning, and estate planning.
Principal
Principal is the original amount of money you borrow. It does not include fees, interest, or other costs. It is simply the base amount of the loan. For example, if you borrow $500, the principal is $500. Any fees added later are separate from the principal.
Principal Balance
A principal balance is the amount of money still owed on a loan before any interest or fees. It starts as the original amount borrowed. Each time a payment goes through, some of that payment reduces the principal. The rest covers interest. The principal balance goes down over time as payments continue.
Rainy Day Fund
A rainy day fund is money set aside for small, unexpected expenses. These costs are not as serious as emergency expenses but can still disrupt a budget. What is a rainy day fund? It is a small savings fund used for everyday surprises like a minor car repair, a broken household item, or basic home maintenance.
Registered Retirement Savings Plan
A Registered Retirement Savings Plan (RRSP) is a financial tool created by the Canadian government to help you save money for retirement. When you contribute money to an RRSP, you lower your income taxes for the year, and the money you put in can grow over time.
Repayment Plan
A repayment plan is a structured schedule that shows how a loan will be paid back over time.
RESP (Registered Education Savings Plan)
An RESP is a special type of savings account in Canada that helps parents or guardians save money for their child’s education after high school. RESP stands for Registered Education Savings Plan, and it lets your money grow over time while getting help from the government.
Responsible Borrowing
This means only borrowing what you can afford to pay back. It’s about using loans in a smart way, especially when money is tight.
Secured Loans
Secured loans are loans that require the borrower to pledge an asset as collateral. Collateral is something of value, such as a home, vehicle, or savings account. The asset helps protect the lender if the loan is not repaid as agreed. If payments are missed, the lender may have the right to take steps to recover the debt using the pledged asset. Because of this, secured loans carry different risks than unsecured loans.
Take Home Pay
This is the amount of money you actually get in your bank account after taxes and other deductions are taken off your paycheque. It’s also called net pay.
Tax-Free Savings Account
A Tax-Free Savings Account (TFSA) is a savings account provided by the Canadian government to help you save money tax-free. With a TFSA, you don’t pay taxes on any money you earn inside the account.
Underwriting Loans
Variable Interest Rates
Variable interest rates are interest rates that can change over time. The rate may move up or down based on market conditions or a reference rate used by lenders. When the rate changes, the cost of borrowing can also change. Because of this, loans with variable interest rates do not always cost the same throughout the loan term.
Variable Rate Mortgages
A variable rate mortgage is a mortgage where the interest rate can change over time. The rate usually moves up or down based on changes in broader interest rates in Canada. When the rate changes, the amount of interest you pay can also change. Because of this, a variable rate mortgage does not always cost the same from month to month.