Loan Of Terminology Glossary: Things to Consider Before Signing

Loan Of Terminology Glossary

Loan Of Terminology Glossary: If you’re tight for cash, a personal loan can assist. You can use it to pay for this week’s groceries, your child’s tuition, or other unexpected costs.

It can be unsettling to sign a contract with a lender, though. You’ll be drowning in foreign and extremely technical words and phrases when you read the fine print. It will be difficult to evaluate an offer if you are not familiar with such jargon; you might not even be able to tell if you are getting a fair deal.

So make sure you review this extensive vocabulary of loan terms before signing anything.

Also Read: In California Benefits Jumbo Mortgage Loans

💸 Use a Personal Loan to Finance Your Objectives

Whatever your objectives, a personal loan can help you achieve them. You can discover a personal loan at Moneymax that fits your needs in terms of repayment capacity and aspirations.

Make a quick application after weighing your options: 

Loan Of Terminology Glossary Terminologies: 24 Terms to Know

Does the interest rate differ from the annual percentage rate? This little loan dictionary can teach you all of that and more. 

📌 Amortization 

This involves breaking up your entire debt into manageable payments spread out throughout the loan. It’s your monthly payment until the debt matures, to put it simply.

Both the principle and the interest are included in amortization.  

📌The APR, or annual percentage rate,

This represents the entire cost of taking out a loan from the lender. Together with other fees like closing charges, it also includes the interest rate. This indicates that, on average, the interest rate is lower than the APR.

📌 Debtor

A person who takes out a loan from a bank or other lending institution is known as a borrower. 

📌 Co-borrower

This word in loans refers to a borrower who applies for a loan with another borrower. For instance, you will be each other’s co-borrower if you and your friend take out a bank loan to launch a business together.

📌 Supporting Information Loan Of Terminology Glossary

This is a reference to an asset that the borrower will provide the lender as security for a loan. Many assets, including a house, an automobile, and even company merchandise, might be pledged as collateral. The collateral will be seized by the lender if you are unable to repay the loan.  

📌 Co-Signer

When someone co-signs a loan with a borrower, they guarantee repayment if the borrower defaults on the debt. A co-borrower and a co-signer are different in that the former has access to the loan proceeds while the latter does not. 

📌 Credit Rating Loan Of Terminology Glossary

One of the most crucial terms related to personal loans is this one. A borrower’s credit score is a numerical representation of their level of responsibility and reliability to a lender.

Being approved for a loan is more likely if you have a high credit score. Even better terms and pricing are available.

A poor credit score makes you a dangerous borrower in the eyes of the lender. Thankfully, you may raise your credit score by paying off your current debt and paying your bills on schedule.

The Credit Information Corporation is the place where you may obtain your credit report.[1] 

📌 Debt Settlement

Consolidating several debts into a single loan is known as debt consolidation. You would then only need to make one monthly payment.

You’ll just need to remember one due date, which is helpful if you’re managing several loans. If the interest rate on the combined loan is lower, you can also save money. 

Offer valid: through September 30, 2024.

Want money? Use Moneymax to apply for a UnionBank Personal Loan and receive a welcome bonus of up to ₱10,990 if you apply by September 30, 2024!

Select between a ₱6,590 Marshall Willen or ₱5,000 in Giftaway cash credits if your disbursed amount is less than ₱250,000. Select either ₱10,990 worth of Apple AirPods 3 or ₱10,000 in Giftaway cash credits if the amount is ₱250,000 or above.

To apply right now, click the banner!

The promotion for the Moneymax UnionBank Personal Loan is valid through September 30, 2024. as per FTEB 196530 Series of 2024 Fair Trade Permit No. issued by DTI. There are terms and conditions.

📌 By Default

This loan jargon describes a borrower’s inability to repay the loan after a predetermined amount of time. Different standards and guidelines are applied by each bank or lender when evaluating a default. To find out how your lender defines a default, read the fine print.

📌 Early Payment Charge Loan Of Terminology Glossary

This is known as the early settlement charge by some lenders. In any case, if you wish to repay your loan in full before it matures, you must pay this cost.

Recall that interest is how banks and lenders make money. They will no longer be able to charge interest if you pay off your debt earlier than planned. One tactic they use to recover what they could have received is an early payment fee.  

📌 Extension Charge

In case you’re facing difficulties repaying your debt, you can request an extension from the lender. You will be required to pay the related cost if your request for an extension is granted.

But be aware that extending your loan will ultimately result in higher interest payments.

📌 Grace Period

The time after your due date that you have to still make a payment is known as your grace period. Within the grace period, payments are not deemed to be late and are not subject to late payment fines or other penalties.

Each lender has a different grace period. To find out more, read your contract.

📌 Total Income

Gross income is the borrower’s entire earnings before taxes, other deductions, and contributions (such as SSS, PhilHealth, Pag-IBIG, etc.) are deducted. To ascertain a borrower’s ability to repay a loan, lenders look at their gross income.

📌 Inquiry   

The amount the lender charges for their money is called interest. The principle and interest are the two components of your monthly payment.

Lending institutions and banks impose two categories of interest rates: 

• Fixed interest rate: Throughout the term of the loan, this interest rate remains constant. It produces anticipated and precise monthly payments because it doesn’t go up or down.
• Also referred: to as an adjustable interest rate, a variable interest rate fluctuates in value based on the state of the market. However, the variable rate needs to remain within the benchmark rate specified in your loan agreement.  

📌Loan Of Terminology Glossary Late Payment Penalty

When your payment is past due, you must pay this. You might be assessed a fixed fee or, depending on the lender, a percentage ranging from 3% to 8% of the past-due balance, whichever is greater.

UnionBank, for example, assesses a penalty cost of ₱500, or 6%, for late payments.[2]

📌 Origination Fee for Loans

The costs associated with processing your loan application are referred to in this loan terminology. Typically, finance, underwriting, and other administrative processes are covered by this charge. The loan origination fee is typically a negligible portion of the overall loan amount.  

Loan terms mean the time required to repay your loan. For example, if you get approved for a five-year personal loan, you have to pay it back within five years.

Some banks and lenders also use loan terms to refer to the loan term of the business.

📌 Maturity Loan Of Terminology Glossary

If your loan matures on the date you make your final payment, in other words, your due date, you are expected to meet all your obligations on that date.

📌The principal

The principal amount is what you can get from the lender. It does not include interest and other related fees.

When you repay your loan, your monthly payments include principal, interest, and applicable fees (such as late payment fees).

Purchasing tools, devices, and gear for business or the workplace? Are you getting ready for a big life event like a baby or wedding? Are you looking for solutions to cover the cost of your child’s education?

Examine the options available from UNO Digital Bank if you’re looking for both ease and large loan amounts. You can borrow money with a #UNOnow Loan for as little as ₱10,000 and as much as ₱500,000, with a 2% monthly interest rate. It can be repaid in six, twelve, twenty-four, or thirty-six monthly installments.

Use Moneymax to apply for a UNONow Loan right now!  

📌 Refinancing

The process of using another loan to pay off your current debt or loans is known as refinancing. Usually, the goal is to take advantage of more favorable conditions and cheaper interest rates.

Think about this for a clearer image: the interest rate on your current loan, Loan A, is high. You come onto Loan B, which has more accommodating payment terms and a lower interest rate. You can benefit from Loan B’s reduced rates if you are authorized for it.

📌 Renewal Charge Loan Of Terminology Glossary

The lender may offer you the chance to extend your loan once you’ve paid it off in full. A cost known as the renewal fee must be paid to renew a loan that has already been finished. 

📌 Credit with Revolving Interest

Revolving credit is a type of loan where you can take out a maximum amount of credit, pay it back, and then take out additional credit as needed. To put it another way, as long as you make your loan payments, it will automatically renew.

Credit cards are more frequently used in this approach. Still, it’s available as a loan product from certain banks, such as PSBank.[3]

📌 Guaranteed Loan Of Terminology Glossary

Another essential term for personal loans is this one. One kind of loan that needs collateral is a secured loan.

To obtain the loan, you must pledge an asset, such as a vehicle or home. Your collateral will be seized by the lender if you don’t make payments on your secured loan.  

📌 Unsecured Credit

This word for a loan type that doesn’t require collateral—that is, you don’t have to pledge an asset—is the exact opposite of a secured loan. Higher interest rates and more stringent criteria could be enforced by the lender, nevertheless.

Last Words

Be careful not to get confused by the deluge of technical terms while applying for a personal loan. A lending product’s features, terms, and conditions must be completely understood by you.

In addition to going through this glossary of loan terms, don’t be afraid to ask your loan officer to clarify any unclear terms.

Also Read: Cup Loan Program: What Is The Interest Rate?