Before you apply for a personal loan, get familiar with important personal loan terms. Understanding these eight key terms will guide you to the personal loan that may best fit your needs.
A secured loan is a loan that requires the borrower to put up collateral, usually an asset such as a vehicle or property. In the event the borrower is unable to meet the loan terms, the lender is generally entitled to take possession of the borrower’s collateral.
An unsecured loan is a personal loan that does not require the borrower to provide collateral. Credit cards and student loans are considered unsecured loans.
The interest rate is the cost, expressed as a percentage, of what you pay a lender to borrow money.
Debt consolidation is combining multiple debts into one.
A credit score is a numerical measurement used by lenders to help evaluate the creditworthiness of an applicant when making a credit decision. A credit score is determined by a borrower’s credit history which can include bill-payment history, outstanding debt and the number of open accounts, among other things.
A credit report is the information communicated by credit reporting agencies that demonstrate a consumer’s credit standing. Credit reports provide lenders a snapshot of a consumer’s credit history and behavior, including payment history and the status of credit accounts.
Annual Percentage Rate
The annual percentage rate, commonly referred to as APR, represents the annualized cost of credit for a loan and may be higher than the interest rate.
An origination fee is an upfront fee charged by a lender for processing a new loan. It is usually a small percentage of the loan.
Now that you have a base set of terms to work with, you can read and analyze with the clarity and understanding you need to determine what loan terms are right for you. If you have any further questions, contact us at 1-866-248-1255 to speak to one of our dedicated loan specialists.