Cash Advance and Payday Loan Glossary
In an effort to make understanding the payday loan process easier,
we offer the following list of commonly used payday loan terms and their definitions.
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Approved: Being approved, in terms of payday loans, means that you have met the
criteria issued by the lender in order to obtain the loan.
- Apply: This is the process of providing
the requested information to the lender. For example, your bank statement, social security number, account number, etc.
- Accrue: Accumulation of interest
on the loan taken by you.
- Application: Borrower's first step
to get the loan in which he is supposed to give all the necessary information about
him along with different documents.
- Asset: A valuable thing that you
have.
- Assumption: The agreement between
buyer and seller where the buyer takes over the payments on an existing mortgage
from the seller. Assuming a loan can usually save the buyer money since this is
an existing mortgage debt.
- Auto Title Loan:
A short term loan
where you use your car as collateral. Auto Title Loans are also commonly referred
to as Title Loans, Car Title Loans, and Automobile Title Loans.
- Average Daily Balance:
The average
daily balance is a method used to calculate finance charges. It is calculated by
adding the outstanding balance on each day in the billing period, and dividing that
total by the number of days in the billing period. The calculation includes new
purchases and payments.
- Bad Credit: A term used to describe
a poor credit rating. Common practices that can damage a credit rating include making
late payments, skipping payments, exceeding card limits or declaring bankruptcy.
"Bad Credit" can result in
being denied credit.
- Bankruptcy: Bankruptcy is a legal declaration of the inability to repay debts. Bankruptcy should be viewed as a last
resort. It will have a severe impact on a credit rating and will remain on a credit
report for ten years. Furthermore, bankruptcy is not a solution in all cases. Federal
student loans, Federal tax debt and child support are all exempt from bankruptcy
protection. Bankruptcy agreements vary but there are two types of agreements that
most people choose: Chapter 7 and Chapter 13.
- Bank Statement:
This is a document
outlining the activity of your checking account normally issued by your bank.
- Balance: The total amount of money
owed. It includes any unpaid balance from the previous month, new purchases, cash
advances, and any charges such as an annual fee, late fee or interest. The balance
should not be confused with the monthly payment (the minimum payment allowed each
month), which is generally 2% - 5% for revolving credit cards.
- Balance Transfer:
Moving a balance
(debt) from one credit card to another. This is often done with special checks or
forms, or may be offered as an option on some credit card applications. The usual
reason is to shift an ongoing debt to an account with a lower interest rate.
- Borrower: Commonly referred to as
applicant, the borrower is the potential client or customer intending to obtain
the loan.
- Borrower's Integrity:
This is an
undisclosed rating of the applicant, normally ruined when the applicant applies
to too many lenders at the same time or has a bad reputation with another payday
loan lender.
- Capitalization:
Addition of unpaid
accrued interest with your capital loan amount by which both Loan amount as well
as cost to loan increases.
- Cash Advance: Same as a payday loan, this is a provision of cash borrowed against the applicant's forthcoming paycheck.
Cash advances are also commonly referred to as Payday Loans, Payday Advances, Payday
Advance Loans and Fast Cash Loans.
- Checking Account:
The applicant's
account with a banking institution. Lenders normally require the direct deposit
feature on this account to be able to wire the funds directly into the account.
- Credit: What you owe today, you
have to repay it tomorrow.
- Credit Agencies:
Organizations that
collect consumer's credit information and supply it to potential lenders in the
form of a report.
- Credit Check: This is the process
of reviewing information on the applicant's capability to abide to their financial
responsibilities. Most payday loan lenders do not require this.
- Credit Worthiness:
Credit worthiness
is a debtor's ability to pay-off his debts in future.
- Debts: The amount owed by you to
others. Direct Deposit: A common term used to refer to the process of transferring
funds (making a deposit) into your account electronically.
- Fax (Facsimile):
This is an electronic device that allows a user to issue a recipient a copy of a document as it appears
via a specialized phone line.
- Fees: Payday loan lenders normally
charge a fee against the amount borrowed — the higher the amount the higher the
fee. It's considerably low compared to APR charges from credit card companies.
- Interest: Additional amount charged
on the principal.
- Interest Rate:
Additional amount
paid by the borrower for any loan. Usually it is expressed as a percentage.
- Lender: Individual or organization
that provides money as a loan to the consumer against a certain charge called "Interest".
- Liability: The amount you owe to
others is your liability.
- Loan: The amount which is borrowed
from an individual or an organization. The money usually is repaid with an interest.
- Loan applicant:
Any person who approaches
to a lender for a loan is a loan applicant.
- Monthly Payment:
The amount consisting
of principal and interest paid to the lender on a monthly basis.
- Payday Loan: Like a cash advance,
this is a loan taken out based on an expected paycheck that will cover the loan
amount and the fees acquired with it.
- Paycheck: The applicant's weekly,
bi-weekly, or monthly income that they obtain from their employers.
- Payment: Monthly installments paid
by the borrower to the lender in order to repay the loan.
- Repayment: Procedure of paying-off
Lenders/Creditors loan.
- Simple Interest:
Allocation of your
monthly payment between interest and the principal amount based on the amount borrowed,
term of the loan and the balance amount due at a certain point of time.
- Term: The agreed time within which
the borrowed loan amount is to be repaid.
- Wire Transfer:
The computerized
process by which money or funds are moved from one account to another electronically.
This is a very quick way of channeling money into an account.
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today. Not all loan companies will approve you for a loan or can provide you with
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Cash advances are also commonly referred to as Payday Loans, Payday Advances, Payday
Advance Loans and Fast Cash Loans. |
CONSUMER NOTICE: Payday advances should be used for short-term financial needs only,
not as a long-term financial solution. Customers with credit difficulties should
seek credit counseling. |
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