A person or entity that undertakes the responsibility of paying a debt or loan on behalf of another person (the principal debtor) in the event that the latter fails to fulfil their payment duties. Guarantors are often used in loan applications where the principal debtor may not have a solid credit history or does not meet the credit requirements of the lender. The presence of a guarantor can increase the likelihood of the loan being approved, as the guarantor is seen as an additional guarantee that the payment will be duly made.
Interval of time during which a borrower who has obtained a loan or credit is not required to make capital or interest payments or has the option of making reduced payments. During said period, the loan or credit is still active, but the borrower enjoys a break from regular payments.
Financial measure that expresses the total annual cost of a loan or credit, including not only the interest rate but also all the expenses, fees, insurance, services and charges associated with the loan. The GAPR is calculated as an annual percentage and is designed to offer borrowers a comprehensive and transparent view of the total cost of credit. The GAPR is particularly useful for borrowers when comparing different loan or credit options, as it provides a clear assessment of how much the loan will actually cost over time.
A financial measure that represents the interest rate applied to a loan or investment without taking into account the capitalisation of interest or additional charges. It is expressed as an annual percentage and is often used to publicise the base interest rate of a financial product and does not reflect the real total cost to the borrower or the real total return to the investor.