Loan Glossary & Key Terms

An electronic banking network that facilitates direct fund transfers between accounts. Most borrowers repay their loans via scheduled ACH auto-debits, making the process seamless and paperwork-free.

The full annual cost of borrowing money, expressed as a percentage. Unlike a basic interest rate, APR factors in lender fees and charges, making it the most accurate figure for comparing loan offers side by side.

The total amount you currently owe on a loan or credit account. Your balance decreases with every payment and increases if interest or fees are added.

A federal legal proceeding that allows individuals or businesses to seek relief from debts they cannot repay. A bankruptcy filing typically remains on your credit report for 7–10 years, depending on the type.

A short-term loan designed to cover immediate expenses until your next payday. Interest typically begins accruing from the day funds are disbursed, so it's important to repay quickly.

When a lender declares a debt unlikely to be collected after an extended period of missed payments. Despite being written off by the lender, the debt may be sold to a collection agency and you may still be pursued for repayment.

A creditworthy individual who signs a loan agreement alongside the primary borrower and legally agrees to repay the debt if the borrower is unable to. Adding a co-signer can help you qualify for better rates.

A physical or financial asset pledged by the borrower to back a secured loan. Common examples include your home or vehicle. If you default, the lender has the legal right to seize the collateral to recover the outstanding debt.

Interest calculated on both the original loan principal and any interest that has already accumulated. This can accelerate debt growth over time if minimum payments are made.

A consumer reporting agency that collects and maintains credit histories. The three major bureaus in the U.S. — Experian, TransUnion, and Equifax — supply lenders with the credit data they use to evaluate loan applications.

A professional service that helps consumers manage debt, build better money habits, and develop personalized repayment strategies. Often available through non-profit agencies at little or no cost.

The maximum borrowing amount authorized on a credit card or revolving line of credit. Staying well below your credit limit helps maintain a healthy credit score.

A detailed record of your credit history, including all active and closed accounts, payment history, outstanding balances, hard inquiries, and any public records such as bankruptcies.

The process of combining multiple debts — such as credit cards or medical bills — into a single loan, usually at a lower interest rate. This simplifies repayment and can reduce the total interest paid over time.

Failure to repay a loan according to the agreed schedule. Defaulting has serious consequences, including significant credit score damage, collection activity, and potential legal action by the lender.

A missed or overdue loan payment. Even a single delinquency can negatively affect your credit score. Most lenders report delinquencies to credit bureaus after 30 days past due.

An electronic payment method that transfers funds directly into your bank account — no check, no waiting. Many lenders deposit approved loan funds via direct deposit, often within one business day.

A legally recognized electronic signature used to sign and execute loan documents digitally. E-signatures carry the same legal weight as handwritten signatures under the ESIGN Act.

An interest rate that remains unchanged for the entire duration of a loan. Fixed rates offer payment predictability, making it easier to budget month to month.

A legal process by which a mortgage lender reclaims and sells a property when the homeowner fails to keep up with required payments. Foreclosure has a severe impact on credit and should be avoided whenever possible.

A short window of time after a payment due date during which you can still make a payment without incurring a late fee or penalty. Grace periods vary by lender, so always check your loan agreement.

A formal credit check triggered when you apply for a loan or credit product. Hard inquiries are recorded on your credit report and may temporarily reduce your score by a few points. Creditus Loan uses only soft inquiries — your score is never impacted by checking your rate with us.

A loan repaid through a series of fixed, scheduled payments over a set period. Each installment covers a portion of the principal plus accrued interest, so your balance decreases with every payment.

A contractual ceiling that limits how high an adjustable interest rate can climb over the life of a loan. Rate caps protect borrowers from unexpected payment spikes.

A financial penalty assessed by a lender when a scheduled payment is not received by the due date. Late fees vary by lender and loan type — always review your loan agreement for specific terms.

Any financial institution, company, or individual that provides funds to a borrower with the expectation of full repayment, plus interest, according to agreed-upon terms.

A flexible borrowing arrangement that lets you draw funds up to a pre-approved limit, repay, and borrow again as needed — similar to how a credit card works, but often at lower rates.

The agreed-upon timeframe in which a loan must be fully repaid, typically stated in months or years. Shorter terms usually mean higher monthly payments but less total interest paid.

A one-time processing charge collected by some lenders to cover the administrative cost of underwriting and funding a loan. Origination fees are typically deducted from the disbursed loan amount, so factor this into your borrowing calculations.

A very short-term, high-cost loan typically due on your next paycheck. While convenient, payday loans often carry extremely high APRs and should be considered only as a last resort.

An unsecured loan issued based primarily on your creditworthiness, with no collateral required. Personal loans can be used for virtually any purpose — from debt consolidation to home improvements to unexpected expenses.

The original sum of money borrowed before any interest or fees are applied. As you make payments, a portion goes toward reducing the principal and a portion covers interest charges.

The process of replacing your existing loan with a new one — typically to secure a lower interest rate, reduce monthly payments, or adjust the repayment term. Refinancing can save you significant money over the life of a loan.

Extending the due date of an existing loan (usually a short-term loan) by paying an additional fee. Some states restrict or prohibit loan rollovers due to the risk of escalating debt.

A loan backed by a pledged asset (collateral), such as a home or vehicle. Because the lender has recourse if you default, secured loans typically offer lower interest rates than unsecured alternatives.

A credit check that has no impact on your credit score. Creditus Loan exclusively uses soft inquiries during its lender-matching process, so checking your rate with us is completely risk-free.

A lending entity that operates under tribal sovereignty and federal regulations rather than state law. Tribal lenders may not be subject to state interest rate caps, which can mean higher rates. Always read all loan terms thoroughly before accepting any offer from a tribal lender.

A loan granted solely on the basis of your creditworthiness, with no collateral required. Because the lender takes on more risk, unsecured loans generally carry higher interest rates than secured loans.

An interest rate that fluctuates over the life of a loan based on changes to a benchmark index (such as the prime rate). While variable rates may start lower than fixed rates, they introduce uncertainty in your monthly payment amounts.