Amortization, forbearance and LIBOR oh my!

By | November 30, 2016

This is the 10th article in a fall financial series of New Dentist Now blog posts from Darien Rowayton Bank, which provides student loan refinancing and is endorsed by the American Dental Association. Qualifying ADA members receive a 0.25 percent rate reduction to DRB’s already low rates for the life of the loan as long as they remain ADA members. View rates, terms and conditions and disclosures at

DRBA great place to start to raise your fiscal intelligence is to understand the commonly used terms in finance. Below are 12 definitions that would be worth brushing up on before you begin a loan process. The definitions are brought to you by the ADA and DRB Student Loan. ADA Members get a 0.25 percent rate discount when refinancing their student loans with DRB.

Glossary of Financial Terms

  1. Amortization – the paying off of debt with a fixed repayment schedule in regular installments over a period of time for example with a mortgage or a car loan.
  2. Refinance – A refinance occurs when a person revises a payment schedule for repaying debt. Mechanically, the old loanis paid off and replaced with a new loan offering different terms, and often a lower interest rate
  3. Return on Investment (ROI) – A performance measure used to evaluate the efficiency of an investment. ROI measures the amount of return on an investment relative to the investment’s cost.
  4. Annual Percentage Rate (APR) – is the annual rate charged for borrowing, and is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction.
  5. Forbearance – a temporary postponement of loan payments. Forbearance is a form of repayment relief granted by the lender or creditor in lieu of forcing a to go into default.
  6. Liquidity – describes the degree to which an asset or security can be quickly bought or sold in the market, without affecting the asset’s price.
  7. Time Value of Money (TVM) – the idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.
  8. Fiduciary – a person or organization that owes to another the duties of good faith and trust. The highest legal duty of one party to another, it also involves being bound ethically to act in the other’s best interests.
  9. LIBOR – a benchmark rate that some of the world’s leading banks charge each other for short-term loans. It stands for London Interbank Offered Rate and serves as the first step to calculating interest rates on various loans throughout the world.
  10. Adjustable Rate Mortgage (ARM) – a type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan. Normally, the initial interest rate is fixed for a period of time, after which it resets periodically, often every year or even monthly.
  11. Home Equity Line of Credit (HELOC) – a line of credit extended to a homeowner that uses the borrower’s home as collateral. Once a maximum loan balance is established, the homeowner may draw on the line of credit at his or her discretion.
  12. Unsecured Loan – a loan that is issued and supported only by the borrower’s creditworthiness, rather than by any type of collateral. An unsecured loan is one that is obtained without the use of property as collateral for the loan, and it is also called a signature loan or a personal loan.

About DRB

DRB (Darien Rowayton Bank) is a national bank, marketplace lender and the fastest lender in industry history to reach $1 billion in student loan refinancings. FDIC insured and established in 2006, DRB Student Loan has helped thousands of professionals with graduate and undergraduate degrees across the country to refinance and consolidate federal and private student loans, saving these borrowers thousands of dollars each.

DRB launched a personal loan for dentists this year. Borrow up to $80,000 if in practice or 12 months of exiting training with contract. Borrow up to $45,000 if still in training without contract. Click here for more information and to view rates, terms, and disclosures.

For more information about the company, visit

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