Dash of cash glossary in plain English
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Our dash of cash glossary explains 54 personal loan terms simply, so you can read any offer and ask lenders the right questions.
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Personal loan terms from A to Z
54 plain-English definitions of the personal loan terms you will meet in offers, each with its own link you can share.
ACH transfer
An electronic transfer between bank accounts through the Automated Clearing House network. Lenders commonly use ACH to deposit loan funds and to collect automatic monthly payments. A transfer started late in the day or before a weekend may take an extra business day to arrive.
Adverse action notice
A notice a lender sends when it declines a credit request or offers less favorable terms because of information in your file. It generally states the main reasons or tells you how to request them, and names any credit bureau used. Use it as a checklist for what to improve before trying again.
Amortization
The process of paying off a loan through equal scheduled payments that cover both interest and principal. Early payments go more toward interest, while later payments go mostly toward principal. An amortization schedule shows the split for every payment through the end of the term.
Amount financed
The amount of credit you actually receive, after any fee deducted at funding. If a lender subtracts a $50 origination fee from a $1,000 personal loan, the amount financed is $950, even though you repay interest on the full $1,000. Check that this figure covers your expense.
APR (annual percentage rate)
The yearly cost of borrowing, expressed as a percentage, that includes the interest rate plus required fees such as an origination fee. Lenders in our network typically quote about 6% to 35.99% APR, and the lender sets your actual rate. APR is the best single figure for comparing offers with the same amount and term.
Autopay
An arrangement that lets a lender draw each payment automatically from your checking account on the due date. Autopay lowers the risk of a missed payment, and some lenders offer a small rate discount for enrolling. Keep enough money in the account to avoid a returned payment.
Balance
The amount you still owe on a loan at any point, usually the remaining principal plus any interest or fees that have built up. Your balance falls with each installment. It is different from the payoff amount, which is the exact figure needed to close the loan on a specific date.
Charge-off
An accounting step a lender takes when it decides a seriously past-due debt is unlikely to be collected, often after several months of missed payments. A charge-off does not erase the debt, which may be sent to collections. It is a serious negative mark on a credit report.
Co-signer
A person who signs a loan alongside the main borrower and agrees to repay it if the borrower does not. A co-signer's credit and income can help a request, but the debt appears on both credit reports. Not every lender accepts co-signers.
Collateral
Property a borrower pledges to secure a loan, such as a car title or a savings account, which the lender can claim if the loan is not repaid. Most personal loans are unsecured and require no collateral. Secured loans may carry lower rates because the lender takes less risk.
Credit bureau
A company that collects information on how people use and repay credit and sells credit reports to lenders. The three national bureaus each keep their own file on you, and the files can differ slightly. You are entitled to free copies of your reports.
Credit history
The record of how you have borrowed and repaid money over time, including loans, cards, payment timing and accounts sent to collections. A longer history with on-time payments generally helps. A short or thin history gives lenders less to go on.
Credit report
A detailed statement from a credit bureau listing your accounts, balances, payment history, inquiries and public records. Lenders read it to judge how you have handled credit. Review your reports regularly and dispute any errors with the bureau that shows them.
Credit score
A three-digit number calculated from your credit report that estimates how likely you are to repay on time. Payment history and how much of your available credit you use carry the most weight in common scoring models. Lenders use scores alongside income and debt, not as the only factor.
Credit utilization
The share of your available revolving credit, mostly credit cards, that you are using. A $1,500 balance on a $3,000 limit is 50% utilization. Lower utilization generally supports a higher score, and paying balances down can help within a billing cycle or two.
Debt consolidation
Combining several debts, often higher-rate card balances, into one new loan with a single fixed payment. Consolidation can lower the cost when the new APR is lower and the cards stay paid down. Running the cards back up afterward can leave you with more debt than before.
Debt-to-income ratio (DTI)
Your total monthly debt payments divided by your gross monthly income, shown as a percentage. Many lenders look for a DTI under roughly 36% to 43%, though limits vary. Someone with $900 in payments and $3,000 in income has a 30% DTI ($900 ÷ $3,000).
Default
Failing to repay a loan as the agreement requires, usually after a period of missed payments set out in the contract. Default can lead to collection activity, added fees and serious credit damage. Contacting the lender early about a hardship plan may help you avoid it.
Delinquency
A payment that is late. Lenders often report a payment to the credit bureaus once it is 30 or more days past due, and the mark can stay on a report for years. A short delinquency that is quickly fixed does less harm than one that rolls into default.
Disbursement
The moment a lender releases loan funds, usually by direct deposit to your checking account. Some lenders fund as soon as the next business day after approval; it depends on the lender and your bank. The day a dash of cash loan reaches your account is the day your repayment schedule effectively starts.
Due date
The day each scheduled payment must reach the lender to count as on time. Your loan agreement lists every due date. Some lenders let you move it once to line up with your paycheck, so ask if the original date is hard to meet.
Finance charge
The total dollar cost of credit, including interest and required fees such as an origination fee, over the full term. Lenders must show it on the disclosure before you sign. In the representative example with no fees, the finance charge equals the $561.52 in estimated interest.
Fixed rate
An interest rate that stays the same for the life of the loan, which keeps every monthly payment the same. Most personal loans carry fixed rates. A fixed rate makes budgeting simpler than a variable rate that can change.
Grace period
A short window after a due date during which a lender will accept a payment without charging a late fee. Not every loan has one, and the length varies by lender and state. A payment made during a grace period may still accrue extra interest.
Hard inquiry
A credit check a lender runs when you formally apply for or accept credit. It appears on your credit report for others to see and can lower a score slightly for a short time. Several hard inquiries for different credit types in a short span can add up.
Hardship plan
A temporary arrangement a lender may offer when you cannot make payments as scheduled, such as a short deferral or a reduced payment for a few months. Options vary and are never promised. Calling the lender before you miss a payment gives you the best chance of finding one.
Installment loan
A loan repaid in a set number of scheduled payments, usually monthly, until the balance reaches zero. Personal loans, auto loans and mortgages are installment loans. Our guide to installment vs revolving credit compares the two structures.
Interest
The amount a lender charges for the use of its money, calculated on your outstanding balance. On an amortizing loan, interest is a larger share of early payments and shrinks over time. Paying extra toward principal reduces future interest.
Interest rate
The percentage a lender charges on the principal each year, not counting fees. When a lender charges no origination fee, the interest rate and APR are often the same or very close. When a fee applies, the APR is higher.
Joint application
A request in which two people apply together so the lender can consider both incomes and credit histories. Both applicants are fully responsible for repaying the loan. Not every lender offers joint applications, so ask before you count on one.
Late fee
A charge added when a payment arrives after the due date or grace period. The amount is set by the loan agreement and limited in some states. A late fee is not part of the APR, so read the fee section of the offer to see what a slip would cost.
Lender
The company that reviews your application, decides whether to approve it, sets the rate and terms, and sends the money. With our service, the lender is always an independent company in our network, never us. Your loan agreement is with the lender.
Loan agreement
The legal contract between you and the lender that sets out the amount, APR, payment schedule, fees and what happens if you miss payments. Read it fully before signing and keep a copy. If anything differs from the offer you were shown, ask before you accept.
Loan term
The length of time you have to repay a loan, usually stated in months. Our payment table runs from 6 to 36 months. A longer term lowers the monthly payment but raises the total interest you pay.
Loan-request connector
A service that takes one request from a borrower and passes it to several lenders, instead of lending money itself. Someone looking for a quick dash for cash can use a connector to reach multiple lenders with one form. The connector does not decide, set rates or fund the loan.
Monthly payment
The fixed amount due each month on an installment loan, covering interest and part of the principal. It depends on the amount, APR and term. As an estimate from our payment table, $1,500 over 18 months at 19.99% APR is $97.14 a month.
Origination fee
A one-time fee some lenders charge to process a personal loan, usually a percentage of the amount. It is often subtracted from the funds you receive, so you get less than you borrowed. Because it is included in the APR, comparing APRs captures its effect.
Payoff amount
The exact sum needed to close a loan in full on a given date, including principal, interest up to that day and any fees owed. It usually differs from the balance on your last statement. Ask the lender for a payoff quote before sending a final payment.
Prepayment penalty
A fee some lenders charge if you repay a loan early. Many personal loans have no prepayment penalty, which lets you pay ahead and save interest. Check the agreement before you sign if early payoff is part of your plan.
Prequalification
A preliminary review, often using a soft credit inquiry, that shows whether a lender is likely to approve you and at roughly what rate. Prequalified terms are estimates; the lender confirms your details before a final offer.
Principal
The amount you borrow, before interest and fees. In the representative example, the principal is $2,000. Each payment reduces principal by a growing amount as interest takes a smaller share over time.
Promissory note
A signed written promise to repay a set amount under stated terms. For many personal loans, the promissory note is part of the loan agreement. It is the document that makes the debt legally enforceable.
Refinancing
Replacing an existing loan with a new one, usually to get a lower APR, a different term or a lower payment. Refinancing can save money if the new total cost is lower, but fees on the new loan and a longer term can cancel out the benefit. Compare total of payments before switching.
Returned payment fee
A fee charged when a payment bounces because the account lacks enough money or was closed. Your bank may charge its own fee on top of the lender's. Keeping a small cushion in the account before each autopay date helps avoid both.
Revolving credit
Credit you can borrow, repay and borrow again up to a limit, such as a credit card or line of credit. The minimum payment changes with the balance, and there is no set payoff date. Personal loans are installment credit instead, with fixed payments and a fixed end date.
Secured loan
A loan backed by collateral that the lender can take if you do not repay. Secured loans can carry lower rates because the lender's risk is smaller. Most personal loans requested through our form are unsecured.
Simple interest
Interest calculated only on the outstanding principal, not on interest that has already built up. Many lenders use simple interest, so paying early or paying extra lowers the interest you owe. Paying late can increase it.
Soft inquiry
A credit check that does not affect your credit score and is visible only to you. Many lenders use a soft inquiry to prequalify you, and checking your own credit is also a soft inquiry. It is the reason you can usually see estimated terms without a score impact.
State licensing
The state-by-state licenses lenders need to offer consumer loans. Licensing determines which states a lender serves and can affect the amounts, rates and fees it may offer. It is one reason personal loan availability varies by where you live.
Total of payments
The sum of every scheduled payment over the life of the loan, assuming each is made on time. In the representative example it is $2,561.52 ($106.73 × 24). Comparing total of payments is the clearest way to see which offer costs less in dollars.
Truth in Lending disclosure
A standardized statement, required under federal law, that shows the APR, finance charge, amount financed and total of payments before you sign a consumer loan. It lets you compare offers on the same basis. Read it alongside the full loan agreement.
Underwriting
The lender's review of your application to decide whether to approve it and on what terms. Underwriting can include confirming income and identity, checking bank account details and running a hard credit inquiry. Documents requested at this stage should be sent through the lender's secure portal.
Unsecured loan
A loan that requires no collateral, so approval depends on credit, income and debt. Most personal loans are unsecured. Because the lender has no property to claim, rates can be higher than on a comparable secured loan.
Variable rate
An interest rate that can rise or fall over the life of a loan, usually tied to a market index. Variable rates make future payments harder to predict. Most personal loans use fixed rates instead, so check your agreement to be sure.
How to use this personal loan glossary
Our glossary defines 54 personal loan terms in plain English, sorted A to Z. Each entry runs two to four sentences, so you can look up a word from an offer and get straight back to comparing.
Every definition is general information, not advice about your situation. Lenders sometimes use slightly different names for the same item, so if a word on your offer does not match an entry exactly, look for the closest one and ask the lender to explain. People researching a dash of cash request often start with APR, origination fee and debt-to-income ratio, because those three shape both the decision and the cost.
If your question is about how a dash of cash request moves through our service rather than what a word means, our frequently asked questions cover requests, credit checks, repayment and privacy.
Terms that drive the cost of a dash of cash quote
APR, interest rate, origination fee, loan term and principal are the five terms that decide what a personal loan costs. Reading them together tells you the monthly payment and the total you will repay.
Here is how they fit together in the representative example. The principal is $2,000, the loan term is 24 months and the APR is 24.99%. Those three figures produce an estimated monthly payment of $106.73 and a total of payments of $2,561.52, so the estimated interest is $561.52 ($2,561.52 − $2,000). Add an origination fee and the APR rises, even if the interest rate stays the same.
- Change the APR, keep the term: at 24 months, $2,000 is an estimated $95.07 a month at 12.99% APR and $118.08 at 35.99% APR.
- Change the term, keep the APR: at 19.99% APR, $2,000 is an estimated $185.26 a month over 12 months and $74.32 over 36 months, but the longer term costs more in total.
- Change the principal: borrowing less lowers every figure at once, which is why requesting only what you need matters.
Our page on personal loan rates and APRs walks through each cost factor in more detail, and the personal loan calculator lets you test your own combination of amount, rate and term.
Terms you will see in a loan offer
A personal loan offer usually lists the amount financed, APR, finance charge, total of payments, payment schedule and fees. Federal Truth in Lending rules require lenders to disclose these figures in writing before you sign.
- Amount financed: the money you actually receive after any fee is deducted.
- APR: the yearly cost of the loan, including required fees.
- Finance charge: the dollar cost of the loan, interest plus required fees.
- Total of payments: everything you will have paid by the last installment.
- Payment schedule: the number of payments, the amount of each and the due dates.
- Late and returned-payment fees: what a missed or bounced payment would add.
Check that the amount financed covers your need, then compare the total of payments across offers. If a dash of cash loan offer leaves out any of these figures, ask the lender for them before you accept.
Terms that come up when a request is reviewed
Soft inquiry, hard inquiry, debt-to-income ratio, underwriting and adverse action notice are the terms you are most likely to hear while a lender reviews your request or explains its decision.
A typical review runs in that order: a soft inquiry for prequalification, underwriting to confirm income and identity, a hard inquiry if you accept an offer, and either funding or an adverse action notice. Knowing the words makes it easier to follow what a lender is telling you about a dash of cash request and to see what to work on if a request is declined. Our personal loan eligibility guide explains what lenders typically look for at each step.
Questions people ask
Which three terms should I check first on any offer?
Start with the APR, the total of payments and the amount financed. The APR compares price, the total of payments shows the full cost in dollars and the amount financed confirms you will receive enough to cover your expense. Our personal loan rates guide shows how to line offers up.
Do all lenders use the same names for fees and terms?
Not always. One lender may say processing fee where another says origination fee, and some offers say loan length instead of term. The federal disclosure uses standard labels, such as APR, finance charge and total of payments, so use that box to compare offers that word things differently.
Is a glossary definition the same as what my agreement says?
No. These entries are general explanations. Your loan agreement is the binding document, and the lender's definitions and terms there control your loan. If a term in your agreement seems to differ from this dash of cash glossary, ask the lender to explain before you sign.
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