Payday Loan Glossary of Terms

Accrue: Accumulation of interest on the loan taken by you.

Accrued Interest: Interest that has been earned but not yet paid on a loan.

Apply: The process of requesting funds from a payday loan lender. This usually involves providing the requested information to the lender.

Appreciation: Increase in value of assets due to effluxion of time.

Application: Borrower’s first step to get the loan in which he is supposed to give all the necessary information about him along with different documents.

Approved: Being approved, in terms of payday loans, means that you have met the criteria issued by the lender in order to obtain the loan.

Amortize: To pay off in regular installments over a loan term.

Appreciation: The value that an asset gains over a period of time, as opposed to depreciation.

APR (annual percentage rate), Interest Rate: The yearly rate charged to a consumer to borrow the finance company’s money. APR is usually expressed as a percentage. If your interest rate is 8.5%, you will pay $85 per $1000 borrowed.

Asset: The items of value that you own.

Bad Credit: A term for a low credit rating. Making late payments, missing payments, or declaring bankruptcy can damage your credit rating.

Balance: The balance is the amount remaining to be paid on

Basis Point: One hundredth of one percent in the yield of an investment.

Borrower: Person who borrowed a loan.

Capitalization: Addition of unpaid accrued interest with your capital loan amount by which both Loan amount as well as cost to loan increases.

Cash Flow: The pattern of income and expenditures, as of a company or person, and the resulting availability of cash

Check: A demand deposit instrument (a draft) signed by the maker and payable to a person named or to a bearer upon presentation to the bank on which it is drawn.

Collateral: Assets that a borrower is obliged to turn over to a lender if unable to repay a loan. Usually, the property itself is the collateral for a property loan.

Consumer Credit: Loan extended to individuals. Consumer credit includes secured and unsecured installment and revolving credit.

Credit Agencies: Organizations that collect consumer’s credit information and supply it to potential lenders in the form of a report.

Credit History: A partial profile of your financial life given within a particular time frame (usually measured in years). It shows the extent to which you pay your bills on time and how much you may owe particular parties.

Credit Rating: A formal evaluation of an individual’s credit history and capability of repaying obligations. Any number of firms investigate, analyze, and maintain records on the credit responsibility of individuals and businesses. The credit rating is based on the number of outstanding debts and whether debts have been repaid in a timely manner in the past.

Credit Report: A detailed account of the credit, employment and residence history of an individual used by a prospective lender to help determine creditworthiness. Credit reports also list any judgments, tax liens, bankruptcies or similar matters of public record entered against the individual. A fee is usually charged.

Credit Worthiness: Credit worthiness is a debtor’s ability to payoff his debts in future.

Default: Failure to meet a financial obligation.

Demand Deposit: An account balance which, without prior notice to the bank, can be drawn on by check, cash withdrawal from an automatic teller machine, or by transfer to other accounts using the telephone or home computers.
Direct Deposit: An automatic deposit of wages or benefits (such as payroll payments) into a consumer’s bank account. Direct Deposit payments are processed through the Federal Reserve’s Automated Clearing House.

Electronic Fund Transfer Systems (EFTS): A variety of systems and technologies for transferring funds (money) electronically rather than by check. Includes Fedwire, Bankwire, automated clearinghouses (ACHs), and other automated systems.

Equity: The value of the property minus the loan amount.

Interest: The amount charged by the finance company to borrow money.

Interest Rate: Additional amount paid by the borrower for any loan. Usually it is expressed as a percentage.

Lender: Individual or organization that provides money as a loan to the consumer against a certain charge called “Interest”.

Liabilities: The money you owe. Lien: A legal claim on a piece of property until the debt or obligation is satisfied.

Loan: The amount which is borrowed from an individual or an organization. The money usually is repaid with an interest.

Loan applicant: Any person who approaches to a lender for a loan is a loan applicant.

Loan-to-Value Ratio: The relationship between the amount of the loan and the appraised value of the property, expressed as a percentage.

Monthly Payment: The principal and interest paid on a monthly basis over the life of the loan.

Negative Equity: When the amount you owe on a property is larger than what the property is worth.

Net Worth: Your assets minus your liabilities.

Payment: Monthly installments paid by the borrower to the lender in order to repay the loan.

Principal: The amount borrowed.

Repayment: Procedure of paying off Lenders/Creditors loan.

Simple Interest: A method of allocating monthly payday loan payments between interest and principal. The amount of your payment allocated to interest is calculated based on your unpaid principal balance, the interest rate on your cash advance loan, and the number of days since your last payment.