Clear explanations of common loan and mortgage terms to help you borrow with confidence.
ACH (Automated Clearing House) — An electronic network used to transfer funds directly between bank accounts. Most loan repayments are made via ACH auto-debit.
APR (Annual Percentage Rate) — The total yearly cost of borrowing, including both interest and fees, expressed as a percentage. A key figure to compare across loan offers.
Balance — The total outstanding amount owed on a loan or credit account at any given time.
Bankruptcy — A legal process filed in federal court when a borrower is unable to repay debts. A bankruptcy can remain on your credit report for up to 10 years.
Budget — A financial plan that outlines your expected income and expenses over a set period to help manage spending and savings.
Cash Advance — A short-term loan designed to bridge the gap between now and your next payday. Interest begins accruing from the day the funds are issued.
Charge-Off — When a lender writes off a debt as uncollectible after extended non-payment. The debt may still be sold to a collections agency and pursued for repayment.
Co-Signer — A person who signs a loan agreement alongside the primary borrower and agrees to share responsibility for repayment if the borrower defaults.
Collateral — An asset pledged by the borrower to secure a loan. If the borrower defaults, the lender may seize the collateral to recover the debt.
Compound Interest — Interest calculated on both the original principal and any previously accumulated interest, causing the debt to grow over time.
Credit — An agreement to receive goods, services, or money now with a promise to pay later, usually with interest.
Credit Bureau — An agency that collects and maintains consumer credit history. The three major bureaus in the U.S. are Experian, TransUnion, and Equifax.
Credit Counseling — Professional guidance provided to consumers to help them manage debt, improve credit, and develop healthier financial habits.
Credit Limit — The maximum amount a lender allows you to borrow on a credit card or line of credit.
Credit Report — A detailed record of your borrowing history, including all loans, credit cards, payment history, bankruptcies, and outstanding balances.
Creditor — Any person or business to whom you owe money.
Debt Consolidation — Combining multiple debts into a single loan, often at a lower interest rate, to simplify payments and reduce overall interest paid.
Default — Failure to repay a loan according to the agreed terms. Defaulting damages your credit score and may result in legal action or collections.
Delinquency — Failing to make a scheduled loan payment on time.
Direct Deposit — An electronic transfer of funds directly into a bank account, eliminating the need for a physical check.
E-Signature — A legally binding electronic signature that replaces a traditional handwritten signature on digital documents.
Fixed Interest Rate — An interest rate that stays constant throughout the full term of the loan, making monthly payments predictable.
Foreclosure — A legal process in which a lender seizes and sells a mortgaged property when the borrower fails to make required payments.
Grace Period — A window of time after a due date during which a payment can be made without incurring a late fee or penalty.
Hard Inquiry — A credit check initiated by a lender when you formally apply for credit. Hard inquiries can temporarily lower your credit score by a few points.
Installment Loan — A loan repaid over time through a fixed number of scheduled payments (installments), each covering both principal and interest.
Interest — The fee charged by a lender for borrowing money, expressed as a percentage of the loan balance.
Interest Rate Cap — A limit on how high an adjustable interest rate can rise over the life of a loan.
Late Fee — A penalty charged by a lender when a scheduled payment is not received by the due date.
Lender — A financial institution or individual that provides funds to a borrower with the expectation of repayment plus interest.
Line of Credit — A flexible loan arrangement allowing a borrower to draw funds up to a set limit, repay, and borrow again as needed.
Loan Term — The length of time over which a loan must be repaid in full, typically expressed in months or years.
Origination Fee — A one-time fee charged by some lenders to process and fund a new loan, typically deducted from the loan proceeds.
Payday Loan — A very short-term loan intended to cover expenses until the borrower's next paycheck. These typically carry high APRs.
Personal Loan — An unsecured loan provided based on the borrower's creditworthiness, without requiring collateral. Used for a wide variety of purposes.
Principal — The original amount borrowed before any interest or fees are applied.
Refinancing — Replacing an existing loan with a new one, typically to obtain a lower interest rate, reduced monthly payment, or different loan term.
Rollover — Extending the due date of a loan, usually by paying an additional fee. Some states restrict or prohibit rollovers.
Secured Loan — A loan backed by collateral such as a home or vehicle. If the borrower defaults, the lender may take ownership of the collateral.
Soft Inquiry — A credit check that does not affect your credit score. MyUSA Loan uses only soft inquiries during its matching process.
Tribal Lender — A lender operating under tribal law and certain federal regulations, which may not be subject to state interest rate caps. Always read terms carefully when connected with a tribal lender.
Unsecured Loan — A loan not backed by collateral. Approval is based on the borrower's creditworthiness. Personal loans are typically unsecured.
Variable Interest Rate — An interest rate that changes over time based on a benchmark index, potentially causing monthly payments to increase or decrease.