Definitions

A quick glossary of common lending terms you may see while reviewing a loan offer.

• APR (Annual Percentage Rate), The yearly cost of a loan expressed as a percentage, including certain fees, not the same as the contract interest rate.
• Cash advance, Short-term cash, typically meant to bridge a gap until a borrower’s next paycheck, with interest usually charged from the date it’s advanced.
• Cosigner, Someone who signs a loan agreement alongside the borrower and shares responsibility for repayment.
• Credit bureau, An organization (e.g. Experian, TransUnion, Equifax) that compiles credit histories and provides reports lenders use to make decisions.
• Default, Failing to repay a loan or otherwise meet the terms of a loan agreement.
• E-signature, An electronic signature or mark that binds you to a document, made legal in the U.S. by the ESIGN Act.
• Fixed interest rate, An interest rate that does not change for the life of the loan.
• Installment loan, A loan repaid through a predetermined number of scheduled payments.
• Origination fee, A fee some lenders charge for processing a new loan.
• Rollover, Extending a loan’s due date, typically for an added fee, rules vary significantly by state.
• Truth in Lending Act (TILA), A federal law requiring lenders to clearly disclose the true cost of a loan, including the interest rate and terms.
• Variable interest rate, An interest rate that can change over time based on an underlying index.