Guide to Loan Terms

Listed below is a guide to loan terms. It is a useful list of definitions of loan terms that may or may not be familiar to you. Keep it nearby as you will never know 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 shows the cost of a loan expressed as a yearly interest rate, including the interest and other fees associated with the loan.

Application

First step in the official loan process to gather and record information about the potential borrower.

Borrower

Person who has been approved to receive a loan and is then obligated to repay it.

Capitalization

Adding unpaid accrued interest to the principal balance. Capitalizing interest increases the principal amount of the loan and the total cost of the loan.

Collateral

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

Credit Agencies/Credit Bureaus

Organizations that collect individual consumer credit information and provide credit reports to potential lenders.

Credit History

History of an individual's debt repayment. For most types of loans, lenders use this information to gauge a potential borrower's ability to repay a loan.

Credit Rating

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

Credit Report

Record that lists all past and present debts and the timeliness of their repayment and documents an individual's credit history.

Debt

Amount owed to another that must be repaid.

Default

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

Delinquency

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

Interest

Fee charged for the use of money.

Interest Rate

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

Lender

Entity that provides loan funds 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 document you sign when you get a loan. It lists the conditions under which you're borrowing and the terms under which you agree to pay back the loan (also called a promissory note or a mortgage note).

Payment

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

Principal

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

Repayment

Process of paying back borrowed money.

Term

Time limit within which a loan must be repaid.

Variable Interest Rate

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

You may freely reprint this article provided the author's biography remains intact:

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

Latest News


WSAV-TV
Consumer Borrowing in US Falls Record $7.9 Billion
Bloomberg - 3 hours ago
Non-revolving debt, including auto loans, dropped $5.2 billion for the month. Fed policy makers last month cut the benchmark interest rate target to as low ...
Consumers borrow less than expected CNNMoney.com
ECONOMIC REPORT Consumer credit drops record $7.9 billion MarketWatch
CORRECTED - US consumer credit posts record drop in November Reuters
Forbes - The Consumerist
all 210 news articles

Javno.hr
Loan Delinquencies Hit Record High Last Year
Washington Post, United States - 18 hours ago
By Nancy Trejos Delinquencies on auto loans and home equity lines of credit reached their highest levels on record during the third quarter of 2008, ...
Late loan payments hit record high in 3Q USA Today
US consumer loan late payments at 28-year high Reuters
Home-equity delinquencies at record level Newsday
Minneapolis Star Tribune - WalletPop
all 64 news articles

Sallie Mae Raises $1.5 Billion for Private Loans
Washington Post, United States - 2 hours ago
Reston-based Sallie Mae has secured $1.5 billion worth of financing from investment bank Goldman Sachs for a batch of private student loans, a sign that ...
Sallie Mae Closes $1.5 Billion Financing WELT ONLINE
Sallie Mae closes $1.5 billion financing MarketWatch
Sallie Mae Closes $1.5 bln. Financing with Goldman Sachs ... RTT News
all 21 news articles

PennyMac, Led by Ex-Countrywide Head, Buys FDIC Loans
Bloomberg - Jan 7, 2009
Known as PennyMac and led by Stanford Kurland, the firm is paying an average of 30 cents to 50 cents on the dollar for the loans and the FDIC is sharing ...
FDIC Unnationalizes Some Debt Forbes
BlackRock, Highfields-backed firm to share gains and losses with FDIC MarketWatch
PennyMac Completes Purchase of $558 Million in Mortgage Loans from ... Associated Content
The Associated Press - PR Newswire (press release)
all 78 news articles

Reuters
Banks Pare Fed Loans After Increase for Year-End Cash
Bloomberg - 2 hours ago
Outstanding loans to banks through the Term Auction Facility dropped to $384 billion from $450.2 billion, the Fed release showed. ...
Video: Jan. 6: Stocks Finish Higher on Fed Minutes AssociatedPress
The Free-Market Hasn’t Failed Us, Keynesian Economics Has Hawaii Reporter
Will asset-backed securities return? Pottstown Mercury
Kansas City Star - StarNewsOnline.com
all 949 news articles

Boston Globe
General Motors May Not Require Further US Loans to Survive
Bloomberg - Jan 6, 2009
7 (Bloomberg) -- General Motors Corp. has enough government loans to cover the worst-case scenario it described last month and says it won’t need more if ...
End Run On the Treasury Washington Post
GM says govt loans cover worst scenario - report Reuters
GM May Not Need Further Loans: Report TheStreet.com
Detroit Free Press - RTT News
all 135 news articles

Boston Globe
As a condition of loan, UAW cannot strike against General Motors
Detroit Free Press, United States - 1 hour ago
The US Treasury set myriad conditions on GM as part of the plan to loan the company $13.4 billion for survival. Those terms had not been fully disclosed ...
UAW strike would put automakers in default of federal loans DetNews.com
GM chief's accounting of taxpayer loans a refreshing contrast MLive.com
Autoworkers union begins talks on concessions The Associated Press
Detroit Free Press - Detroit Free Press
all 343 news articles

AFP
Citi reaches deal with lawmakers on home loans
The Associated Press - 3 hours ago
WASHINGTON (AP) — Democratic lawmakers have reached a deal with Citigroup Inc. on a plan to let bankruptcy judges alter home loans in an effort to prevent ...
Citi Will Support Bill to Rework Bad Loans TheStreet.com
Citigroup backs Congress plan on home loans: lawmakers AFP
Citi, Senators Reach Mortgage Deal Wall Street Journal
OCRegister - Seeking Alpha
all 418 news articles

Borse Dubai May Get $2.5 Billion Loan as Credit Eases
Bloomberg - 13 hours ago
8 (Bloomberg) -- Borse Dubai Ltd. may be the emirate’s first state-owned company to tap banks to refinance a multibillion-dollar loan since September, ...

Fresh News
Judge OKs LyondellBasell loans after Ch. 11 filing
Forbes, NY - 9 hours ago
US Bankruptcy Judge Robert Gerber gave the company's American unit interim approval to seek up to $2.167 billion in loans. Earlier in the court session, ...
Lyondell Can Borrow $2 Billion, Bankruptcy Court Says Bloomberg
Bankruptcy loans approved for LyondellBasell Chemistry World
Lyondell gets over $2 bln in bankruptcy financing guardian.co.uk
CFO.com Magazine - Bloomberg
all 454 news articles

Resources