Glossary of Terms
Terms To Know:
- Annual percentage rate: the price of credit on a yearly basis, stated as a percentage. Obligated to be disclosed by the loan originator under the federal Truth in Lending Act, Regulation Z. Includes up-front costs paid to obtain the financing, and is, therefore, usually a larger amount than the interest rate certified in the mortgage note. It does not include appraisal, title insurance, and credit report.
- Balance - The total amount of cash owed. It will include any unpaid balance from new purchases, the previous month, any charges such as an annual fee, late fee or interest, and cash advances. The balance shouldn't be bewildered with the recurring monthly payment (the minimum monthly payment allowed), which is generally two to five percent for revolving credit cards.
- Default - Failure to meet the terms of a credit agreement.
- Fee - Instead of using interest, most payday lenders charge a flat fee per hundred dollars borrowed in order to loan money. This fee is added on top to the amount you borrow and due as payment when you are repaying the loan.
- Finance Charge - The total dollar amount paid to get credit.
- Gross income: the income of the borrower before expenses or taxes which are deducted and used for qualifying purposes.
- Loan Application - An application filled out by a potential borrower which details their financial status and determines eligibility for a loan. For a payday loan, this application is usually very simple compared to those for a conventional loan.
- Principal - Amount of the loan.
- Unsecured Loan: An advance of money that is not secured by collateral.
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