Terms Glossary
Last updated June 8, 2025
1. Interest
- Definition: Interest refers to the cost of borrowing money, calculated on the outstanding principal balance. In Hypercore, this specifically refers to regular cash interest that is usually paid periodically.
- Alternative Names: Cash Interest, Simple Interest, Serviced Interest
- Key Features: Calculated on principal balance, may also apply to outstanding compounding balance
2. PIK/Compounding Interest
- Definition: Interest that, instead of being paid in cash, is added to the loan balance and begins accruing interest itself.
- Alternative Names: Payment in Kind (PIK), Capitalized Interest, Rollover Interest
- Key Features: Increases loan balance over time, stored separately in Hypercore's Outstanding Compounding Interest Balance
3. Flat vs. Floating Rate
- Definition: Describes how interest rates are determined throughout the loan term. Flat rates remain constant, while floating rates vary based on market indices.
- Components: Floating rates consist of Base Rate (market index) plus Margin (lender's premium)
- Common Indices: SOFR, Prime Rate, EURIBOR
4. Effective Date vs. Transaction Date
- Definition: Two distinct dates that track when financial events occur and when they impact calculations.
- Effective Date: When an event impacts interest calculations and reporting
- Transaction Date: When the event actually occurred in real-world terms
5. Interest Deposit
- Definition: A portion of the loan amount set aside specifically to cover future interest payments.
- Alternative Names: Retained Interest, Interest Reserve, Advanced Interest
- Function: Automatically covers interest payments until depleted
6. Disbursement
- Definition: The process of releasing loan funds to the borrower, marking the beginning of interest accrual.
- Alternative Names: Drawdown, Advance, Fund Release
- Features: Can be single or multiple, may include retained amounts for fees or interest reserves
7. OID/EIR
- Definition: Methods of calculating the true cost of borrowing and loan discounts.
- EIR: Effective Interest Rate - reflects total borrowing cost including fees and interest
8. Advanced Payment vs. Payment in Arrears
- Definition: Timing options for loan payments relative to the period they cover.
- Advanced Payment: Made before the covered period begins
- Payment in Arrears: Made after the covered period ends
9. Penalties and Fees
- Definition: Additional charges that may apply to the loan.
- Penalties: Charges for non-compliance or late payments
- Fees: Standard service charges for loan administration
- Treatment: Often have different repayment priorities
10. Early Redemption
- Definition: The process of fully repaying a loan before its scheduled maturity date.
- Key Aspects: Includes calculation of all outstanding amounts
- Features: May involve early payment penalties
This feature should only be for full redemptions. If the payout is only partial, please use the repayment action.
11. Write-Off
- Definition: The process of removing unpaid loan balances from financial records.
- Types: Can be partial or complete write-offs
- Impact: Affects financial reporting and loan portfolio management
12. Waiver
- Definition: The formal process of forgiving certain loan amounts or requirements.
- Applications: Can apply to principal, interest, fees, or penalties
- Implementation: May be manual or automated based on conditions
13. Equal Installments vs. Equal Principal
- Definition: Different approaches to structuring loan repayments.
- Equal Installments: Fixed total payment amount with varying principal/interest split
- Equal Principal: Fixed principal amount with decreasing total payments
14. Frequency
- Definition: The timing intervals for various loan events and calculations.
- Applications: Applies to payments, interest calculations, and fee assessments
- Common Options: Monthly, quarterly, semi-annual, annual
15. Deposit
- Definition: A deposit in Hypercore refers to funds charged to the borrower and held upfront, often at disbursement. These are not part of the disbursed loan amount but are retained to cover future obligations or risks.
- Alternative Names: Reserve (Interest Reserve), Retentions, Security Deposit
- Use Cases: Commonly used for holding back funds to cover future repayments, mainly interest
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