March 5th, 2009 
Editor 
Tags: Key Person Insurance
A life insurance policy that a company purchases on a key executive’s life. The company is the beneficiary of the plan and pays the insurance policy premiums. Key person insurance is needed if the sudden loss of a key executive would have a large negative effect on the company’s operations. The payout provided from the death of the executive essentially buys the company time to find a new person or to implement other strategies to save the business.
Loan To Value Ratio
This is the percentage the bank is willing to lend you, expressed as a percentage of the bank’s estimated value of the property and the loan amount required.
Lease Financing
Financing the acquisition of a vehicle by leasing it rather than buying it. The vehicle owner (lessor) agrees to the use of the vehicle by a lessee for a specific term. The lessee keeps the vehicle and pays rent over the term. The lessee generally has the right to terminate the agreement early by buying the vehicle from the lessor. At the end of the term the lessee must either buy the vehicle or extend the lease period.
Lender
A bank, credit union, savings & loan association, or other financial institution that provides funds for business or personal use.
Mortgage Loan
This is an agreement between a customer and a mortgage lender whereby the lender provides in the form of a home loan, and where the property financed serves as collateral for the loan.
Mortgage Originator
A broker who assists home buyers in obtaining mortgage loans and is compensated via commission paid by the mortgage lender.
Mortgagee
A bank / mortgage lender who provide home finance secured by fixed property.
Mortgagor
A borrower who obtains home finance from bank / mortgage lender by mortgaging his property to the lender / bank as security
Named driver
This is a person who is named as a designated driver of a particular vehicle in a car insurance policy. Other drivers who aren’t mentioned in the car insurance policy may be protected by as well, if they are driving the car with the consent of the car insurance policyholder. This, however, may affect your car insurance rates.
NHBRC
The National Home Builders Registration Council ensures that builders extend their commitment to customers by providing a five-year warranty.
Nominal rate
The nominal rate is the stated rate of interest.
Occupational Rent
This is paid by the buyer to the seller at an agreed amount, if the buyer decides to move into the property before transfer of ownership takes place.
Offer To Purchase
This is an offer in writing from the buyer to the seller, which is usually prepared by the estate agent. Once signed by all parties it becomes a legal and binding contract between the seller and the buyer.
Off-balance sheet funding
Financing your vehicle in such a way that it is not reflected on the balance sheet of your business or employer.
Originator
See Mortgage Originator
Property Guarantee
This is a written document issued by a bank that promises to pay to the person or financial institution named, the sum referred to on registration in a Deeds Office of the transactions mentioned in the guarantee. See Guarantee
Per Diem Interest
Indicates that the buyer will have to pay interest from the date of closing to the end of the month, depending on the day of the month the deal is finalised. The first vehicle payment will usually be due on the first of the following month.
Quarter
A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
Quarters are important because all listed companies report their results on a quarterly basis.
You’ll hear the following abbreviations:
Q1 - January, February, and March
Q2 - April, May, and June
Q3 - July, August, and September
Q4 - October, November, December
For example, if earnings per share were R1.50 in Q1, this means earnings were R1.50 for the period of January, February and March.
Registration
This is the process whereby ownership of the property is transferred from the seller to the buyer via a deed of transfer.
Refinancing
Process of paying off one loan with the proceeds from a new loan secured by the same asset , typically at a lower interest rate.
Repo Rate
This is one of the monetary policy tools used by the Reserve Bank to regulate money supply and the rate of inflation in South Africa .This is the wholesale rate at which the Reserve Bank is prepared to lend money to the banking sector.
Repayment Term
The term of a loan is the period during which the borrower is required to make payments on his or her loans. When the payments are made monthly, the term is usually given as a number of payments or years.
Residual Payment
A residual is a lump some payment at the end of the contract, it does not form part of the payment structure.
Road Accident Fund (RAF)
A public fund that pays compensation to people who have been injured or killed in motor vehicle accidents.
Roadworthy Certificate
Proof that a vehicle has passed a roadworthiness inspection. The inspection checks that the vehicle is in a good condition and is fit to be on the road.
Second Bond
Is an advance or additional loan on a home mortgage usually used for improvements / renovations , however over recent years consumers have been tapping into their home equity for other consumer purchases as well.
Simple Interest
Interest that is paid only on the principal balance of the loan and not on any accrued interest.
Surety
A Surety is a person who guarantees to pay for someone else’s debt if he or she should default on a loan obligation. Suretyship is usually required where the borrower is thought to be a poor credit risk.
Term
The number of years (or months) during which the loan is to be repaid.
Title Deed
This legal document is registered at the Deeds Office as proof of ownership of property. It contains specific details related to a property .
Transfer Costs
These comprise transfer duty, conveyancer’s fees and VAT. Transfer duty is a tax levied by the government on the purchase of immovable property and is calculated on the purchase price.
Top-up Insurance
Vehicle insurance that pays out the difference between the insured value (market value) and the amount outstanding under the vehicle finaning agreement. For example if the insured value is R80 000 , but the owner still owes R110 000 on the vehicle , Top-up insurance would cover the shortfall - also known as Gap Insurance.
Trust Account
Attorneys and Estate Agents often hold monies on behalf of others especially during the property transfer process. These funds are held in the Attorneys/ Estate Agents Trust account and benefits from protection provided by their respective governing bodies.
Usufruct
A legal term describing a situation wherein a person or company has a temporary right to use and derive income from someone else’s property (provided that it isn’t damaged). Typically used in the estate planning process , for example a father would leave ownership a property/investment to his son(s) , but the income of that asset/usage vests in his wife for the duration of her life.
Usury
The act of lending money at an interest rate higher than that permitted by law. This is illegal and maximum interest rates were prescribed by the Usury Act and now regulated by the National Credit Act.
Variable Interest Rate
The official interest rate charged by the bank fluctuates according to the repo rate.
Voetstoots
This clause is always found in a sale document and means “let the buyer beware”. All defects must be mentioned to the buyer upfront. If there are any defects in the property of which the seller was unaware, the buyer will acquire the property with such defects.
Waiver Of Lien
This is a legal document where a contractor waives his common law right to hold control over a property if he is not paid in full.
Xetra
An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra platform offers increased flexibility for seeing order depth within the markets and offers trading in stocks, funds, bonds, warrants and commodities contracts.
Yield
The income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment’s cost, its current market value or its face value.
ZAR
The currency abbreviation for the South African rand (ZAR), the currency for South Africa. The South African rand is made up of 100 cents and is often presented with the symbol R. The rand comes from the word “Witwatersrand” which means “white waters ridge”.
The South African rand was first introduced at the same time as the Republic of South Africa was established. The rand replaced the South African pound at a rate of 2 rand to 1 pound.
From introduction until 1982, the rand was actually more valuable than the U.S. dollar, after which political pressure and sanctions caused the currency to lose value.
Zero Coupon Bond
A debt security that doesn’t pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.
Some zero-coupon bonds are issued as such, while others are bonds that have been stripped of their coupons by a financial institution and then repackaged as zero-coupon bonds. Because they offer the entire payment at maturity, zero-coupon bonds tend to fluctuate in price much more than coupon bonds.