The A to Z of Modern Debt

Most of us are familiar with debt in one form or another, whether that be a small overdraft on a bank card, a mortgage that can last decades, or an IVA debt is increasingly becoming an inescapable facet of modern life. However, although most are us are all too familiar with the ins and outs of the debt we are in, the financial world is a large and intricate place, and the following are a few of the terms, phrases, processes and other aspects of debt and finance that you may or may not be aware of.

Syndicated loan - A syndicated loan is a loan of a huge amount, which is usually put forward by a group of banks for one company. The reason for one of these types of loan is that any lending of money comes with a certain amount of risk, and with a company wishing to finance its operations the risk is high due to the fact that money to the tune of many millions is being borrowed. Banks lower the risk to themselves by spreading it, meaning each bank is effectively only lending a relatively small amount.

Estate Planning - It its simplest form, estate planning is disposing of an estate - the net worth of a person at any one time, usually in this case after death. Some of the aims and functions of estate planning include eradicate uncertainties over ownership of said estate, and also increasing its worth by lowering the taxes concerned with the situation.

Credit Rating - A credit rating sets out how worthy an individual, company or even whole nation is of receiving credit. The judgement is usually made after an assessment of total borrowing history, and also current assets and liabilities. Effectively a credit rating is the probability that the subject will pay back the loan. A poor credit rating obviously suggests a higher possibility of the loan not being paid back, and results in higher interest rates and ultimately a refusal of credit. The main credit reference agencies in the UK are Experian, Equifax and call credit.

Most of us are familiar with debt in one form or another, whether that be a small overdraft on a bank card, a mortgage that can last decades, or an IVA debt is increasingly becoming an inescapable facet of modern life. However, although most are us are all too familiar with the ins and outs of the debt we are in, the financial world is a large and intricate place, and the following are a few of the terms, phrases, processes and other aspects of debt and finance that you may or may not be aware of.