Personal Loan Glossary - Important Terms to Know
Important Terms Related to Personal Loan
Personal Loan Glossary at Indiabulls Dhani
Confused about certain terminology and jargons while applying for a personal loan? At Indiabulls Dhani you can be relieved by knowing the complex personal loan terms with our personal loan glossary. Indiabulls Dhani’s Personal Loan glossary section will help you understand some personal loan related jargons, to ensure that your loan application is easy to understand. Simplify all the complex personal loan jargons such as line of credit, annual percentage rate and more, as well as industry definitions for terms like personal loan interest rates, personal loan EMI calculator and more.
Annual Percentage Rate :
Annual percentage rate is the interest rate for an entire year (rather than the usual monthly interest rate) as applied on a loan, mortgage loan, investment, credit, etc. In case of a loan, APR might also include fees
you may be required to pay to take out the loan.
Application Fee :
Application fee is a fee which might be charged by some lenders to cover costs associated with processing the loan such as arranging and processing the application of a loan.
An automatic bill payment is one of the repayment options available for one’s personal loans. It is a money transfer scheduled on a predetermined date to pay a recurring bill on a particular day of each month.
A borrower is someone who receives funds in the form of a loan from a lender. The borrower is supposed to repay the funds over a pre-determined period.
Credit agency :
Credit agencies, also known as credit rating agencies, are organizations that review your credit information and create credit reports which help potential lenders and creditors determine whether to lend or extend credit
to an individual or business.
Credit history :
A credit history is a record of a borrower’s responsible repayment of debts over time.
Credit Report :
Credit Report is a report generated by an authorized agency that shows the potential borrower’s credit history.
Credit Score :
A credit score is a numerical expression based on a level analysis of a borrower’s credit files, representing the creditworthiness of an individual. A credit score is an individual’s valuation and ability to repay a
loan. It is computed based on his/her history of borrowing and repaying.
Digital Payment :
Digital payments are defined as any payments made using digital instruments. In digital payment, the payer and the payee, both use electronic modes to send and receive payment. No hard cash is used.
Down Payment :
Down payment is an initial up-front partial payment for the purchase of expensive items such as a property or a car. It is generally paid in cash or equivalent while finalizing the transaction.
Gross monthly income :
Gross monthly income is the amount of income one earns in a month before taxes or deductions are taken out. A gross monthly income is helpful to know when applying for a credit card or a loan.
Interest Rate :
Interest rates are the cost paid by the borrower for availing a loan from a lender. It is a percentage of the loan amount that is to be paid along with the principal amount every month throughout the tenure.
Late Payment :
Late payment is when a borrower delays his/her monthly EMI payments. Lenders usually charge a late payment fee to customers who fail to make their payments on time.
A lender is an individual, a public or private group, or a financial institution that lends money to borrowers with the expectation that the funds will be repaid.
Line of credit :
Lines of credit are loans which do not require any kind of security or collateral and are usually offered at variable interest rates.
Loan Amount :
Loan amount is the total amount that the borrower promises to pay back after the down payment has been paid.
Loan Agreement :
A Loan Agreement is a formal document representing the terms and conditions of a personal loan. It also includes the rights and obligations of a lender and borrower.
Maximum Loan Amount :
A maximum loan amount describes the total amount that a borrower is authorized to borrow from a lender.
Minimum Loan Amount :
A minimum loan amount describes the total amount that a lender requires a borrower to borrow under the loan agreement.
Payday Loans :
A payday loan is a type of unsecured personal loan which can be availed based on the borrower’s job. They are ideal for any financial emergency. A payday loan can be availed in case one runs short of money towards the
end of the month, he/she can opt for a payday loan for a few days and repay it once the salary is credited to the borrower’s account.
Personal loans :
Personal loans are usually unsecured loans, taken for any personal reason like purchasing a new house or a car, an overseas holiday, furniture, elective surgery, or a wedding, for a funeral, to pay any utility bill,
Personal Loan App :
A personal loan app is an online loan application process that enables one to take a personal loan quickly.
Personal loan eligibility :
Personal loan eligibility are the criteria’s required to be fulfilled by a borrower if he/she wishes to avail a personal loan.
Personal loan EMI calculator :
Personal Loan EMI calculator is a valuable online automatic tool to ascertain the amount of EMI (Equated Monthly Installment) to be paid by the borrower.
Principal Amount :
The principal amount of a loan is the amount you borrow from a lender, exclusive of any fees or interest.
Secured Personal Loan :
Secured personal loan is a personal loan that requires the borrower to pledge assets as security or collateral to the lender.
Term of Loan :
The term of the loan refers to the tenure of the loan, i.e., the time frame allotted to the borrower to repay the amount borrowed.
Top-up loan :
Top-up loan is a facility provided by a few financial institutions like banks, housing finance companies, etc. which allows a borrower to borrow a certain amount of money over and above their home loan.
Total Loan Repayment :
Total Loan Repayment is the total amount paid by the borrower to the lender at the end of the term. It comprises of the sum of the loan amount and the interest charged on the loan.
Unsecured loans :
A loan where the borrower does not pledge any asset as collateral for their debt. As there is no collateral undertaken, there is a higher risk to the lender, and therefore the interest rates attached to unsecured loans
are generally higher than those for secured loans.
Unsecured Personal Loan :
An unsecured personal loan is a fixed interest rate personal loan that does not require any collateral or security.