Guide to Loan Terms

Listed below is a usher to loan terms. It is a utile listing of definitions of loan terms that may or may not be familiar to you. Keep it nearby as you will never cognize when you might need it for quick reference.

Accrue

Process in which interest accumulates on a borrower's loan.

Amortization

A repayment method in which the amount you borrow is repaid gradually though regular monthly payments of principal and interest over the term of the loan.

Annual Percentage Rate (APR)

The APR demoes the cost of a loan expressed as a annual interest rate, including the interest and other fees associated with the loan.

Application

First measure in the functionary loan procedure to garner and record information about the possible borrower.

Borrower

Person who have been approved to have a loan and is then obligated to refund it.

Capitalization

Adding unpaid accumulated interest to the principal balance. Capitalizing interest additions the principal amount of the loan and the sum cost of the loan.

Collateral

Property pledged as security for a loan to guarantee repayment of a loan.

Credit Agencies/Credit Bureaus

Organizations that cod person consumer credit information and supply credit reports to possible lenders.

Credit History

History of an individual's debt repayment. For most types of loans, lenders utilize this information to gauge a possible borrower's ability to refund a loan.

Credit Rating

Grade assigned to denote the nett worth and credit standing of an individual or a business.

Credit Report

Record that listings all past and present debts and the seasonableness of their repayment and written documents an individual's credit history.

Debt

Amount owed to another that must be repaid.

Default

Failure to refund a loan according to the terms of the loan.

Delinquency

Failure of a borrower to do a timely payment on a loan.

Interest

Fee charged for the usage of money.

Interest Rate

The amount of interest charged on a loan, usually expressed as a percentage.

Lender

Entity that supplies loan finances to the borrower. Depending on the type of loan, the lender may be a bank or other financial institution.

Loan

Money borrowed from a lending institution, usually repaid with interest.

Loan Applicant

Party applying to the lender for a loan.

Note

Binding legal written document you subscribe when you get a loan. It names the statuses under which you're borrowing and the terms under which you hold to pay back the loan (also called a promissory short letter or a mortgage note).

Payment

Periodic (usually monthly) episodes paid to a lender to be applied toward repaying your loan.

Principal

Loan amount borrowed from a lender, not including interest or further fees.

Repayment

Process of paying back borrowed money.

Term

Time bounds within which a loan must be repaid.

Variable Interest Rate

Interest rate that changes periodically in relation to an index. Payments may increase or lessening accordingly.

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