Services

Glossary

Amortization:
Way of repayment of loan in the form of regular monthly repayments. The regular monthly payment pays a part of interest and principal amount.

Annual percentage rate (APR):
It is the yearly rate of interest charged on the loan which is a percentage of the loan. Considered the real cost of the loan it should be considered before deciding on the loan.

Bad Debt:
A debt that is not repaid and is therefore of no use to the creditor.

Bankruptcy:
A legal procedure that saved the debtor from facing any legal action from its creditors. Two types of bankruptcy are recognized – Chapter 7 and Chapter 13 bankruptcy and is considered very detrimental to the credit history of the borrower.

Cash loan:
A small, short term loan which is to be repaid by next payday. A variety of names are used to refer to cash loan - cash advance loans, check advance loans, payday loans, post-dated check loans, or deferred deposit check loans.

Loan term:
The time period required to payback the loan. The amortization term usually varies with loan type.

Unsecured Loan:
A loan where the lenders money is not secured by collateral or any visible asset.

Payday Loan:
A payday loan is a loan which is to be repaid next payday. It is a short term loan meant for urgent financial requirements.

Credit score:
A three digit number that gives the lender an idea about the credit history of the debtor. It displays to the lender whether the borrower is likely to payback the loan or not. Depending on the credit score, the creditor decides to extend the loan or not.

Employment verification:
Confirmation that the information provided by the loan applicant is correct. This enables the lender to proceed further with the loan request.

Late payment fee:
A charge on the debtor whose monthly payment is not received on the due date.

Loan Agreement
A written contract between a lender and a borrower that carefully explains the rights and obligations of both parties regarding a particular loan.

Prepayment penalty:
A lender’s charge to the borrower for repaying the loan before the term of the loan is completed.