Glossary of Loan Terms: Payday, Title, Installment and Personal Loans
| Terms defined | 63 |
|---|---|
| Best numbers for budgeting | Finance charge and total of payments |
| Typical payday fee | $10–$30 per $100 (CFPB) |
| Military borrowers | MLA caps most credit at 36% MAPR |
| Amounts through our network | $100–$5,000, by state and lender |
Cost and pricing terms
APR (annual percentage rate) — The yearly cost of credit, including interest and most required fees, expressed as a percentage. Lenders must disclose it before you sign, so you can compare loans of different sizes and lengths. For short loans, many borrowers also compare the dollar fee and the total to repay.
Finance charge — The total dollar cost of credit: interest plus the fees you must pay to get the loan. The federal Truth in Lending Act requires lenders to disclose it before you sign.
Amount financed — The credit you actually receive or that is paid on your behalf. If an origination fee is deducted up front, the amount financed is less than the loan amount.
Total of payments — Everything you will pay if you make every payment as scheduled: the amount financed plus the finance charge. It is the simplest number for budgeting.
Fee per $100 — How payday lenders usually quote cost, for example $15 for every $100 borrowed. The CFPB says payday fees typically range from $10 to $30 per $100, and many states cap the fee.
Interest rate — The percentage charged on the balance, not including fees. Because it leaves out fees, it can be lower than the APR on the same loan.
Origination fee — A one-time charge for processing a loan, often a percentage of the amount, usually taken out of the money you receive.
Late fee — A charge for a payment made after the due date or grace period. Amounts are set by your contract and limited by state law.
NSF fee (non-sufficient funds) — A fee charged when a payment is returned because the account does not have enough money. Your bank may charge one and the lender may charge another, if state law allows.
Prepayment penalty — A fee for paying off a loan early. Many small-dollar loans do not have one, and the Military Lending Act bans them for covered borrowers.
Repayment terms
Rollover — Paying only the fee on a payday loan so the due date moves to your next payday. The principal stays the same. Many states limit or ban rollovers.
Renewal — Extending a loan for another term, usually with a new fee. Often used interchangeably with rollover, especially for title loans.
Refinance — Replacing an existing loan with a new one, sometimes from the same lender, often to change the payment, the term or the rate.
Consolidation — Using one new loan, usually a personal installment loan, to pay off several existing balances so you have a single payment on a set schedule.
Extended payment plan (EPP) — An option, required by law in some states, to repay a payday loan in several installments without extra fees. Rules on who qualifies and when to ask vary by state.
Cooling-off period — A state-required waiting period between payday loans. Length and rules vary by state, and not every state has one.
Amortization — Paying a loan down with scheduled payments that each cover interest and some principal, so the balance reaches zero by the end of the term.
Balloon payment — A final payment much larger than earlier ones. A single-payment payday loan is repaid in one lump sum on the due date.
Grace period — Time after a due date before a late fee applies or, for credit cards, the window to pay for purchases without interest. Credit card cash advances usually have no grace period.
Types of loans and advances
Payday loan — A short-term loan, generally $500 or less, repaid in one payment on your next payday, according to the CFPB. Also called a cash advance or deferred presentment loan. See payday loans.
Deferred presentment — The legal term many states use for payday lending: the lender agrees to wait (defer) before depositing (presenting) your check or electronic debit.
Installment loan — A loan repaid in a set number of scheduled payments. Personal loans and auto loans are installment loans. See installment loans.
Personal loan — Usually an unsecured installment loan for personal, family or household use, repaid in fixed monthly payments. See personal loans.
Line of credit — Revolving credit with a limit you can draw on, repay and draw on again.
Title loan — A loan secured by your vehicle title. You keep driving the car while you repay; the lender holds a lien and can repossess the vehicle if you default. See title loans.
Title pawn — A title-secured transaction structured under pawnbroker law rather than lending law. Georgia, for example, governs title pawns under its pawnbroker statutes.
Pawn loan — A loan secured by an item you leave with a pawnbroker. Typically non-recourse: if you don't repay, the shop keeps the item.
Cash advance — Cash borrowed against a credit card's line, a small advance from an app, or another name for a payday loan. See cash advance.
Earned wage access (EWA) — Access to wages you have already earned before payday, offered through employers or directly by apps, usually for a fee, subscription or tip.
PAL (payday alternative loan) — A small loan from a federal credit union under NCUA rules. PAL I loans are $200 to $1,000 and PAL II loans are up to $2,000; credit union membership is required.
Collateral, default and collection
Collateral — Property pledged to secure a loan, such as a car title or a pawned item.
Secured loan — A loan backed by collateral the lender can take if you don't repay.
Unsecured loan — A loan with no collateral. The CFPB treats payday loans as unsecured, and most personal loans are unsecured.
Lien — A legal claim on property as security for a debt. A title lender records a lien on your vehicle, and it is released when you pay in full.
Repossession — When a lender takes back collateral, such as a car, after default. State law sets notice and sale rules.
Deficiency balance — What you may still owe after repossessed collateral is sold for less than the debt, where state law allows.
Charge-off — When a lender writes a debt off as a loss on its books. The debt is still owed and may be sold to a collector.
Collection agency — A company that collects debts for others or on debts it bought. Under federal law, collectors must send validation information and cannot falsely threaten arrest.
Judgment — A court's decision that you owe a debt. A judgment can allow remedies such as garnishment under state law.
Garnishment — A court-ordered deduction from wages or a bank account to pay a judgment. Certain federal benefits, such as Social Security, have special protection under federal rules.
Banking and payment terms
ACH authorization — Your permission for a lender to collect payments electronically from your bank account through the ACH network. It is how most online loans are funded and repaid.
Post-dated check — A check dated in the future that a payday lender holds and deposits on the due date.
Overdraft — When a payment exceeds your account balance and the bank covers it, often for a fee. Keeping the payment amount in your account on the due date avoids it.
Direct deposit — Pay sent electronically to your bank account. Many lenders and apps look at regular direct deposits when reviewing a request.
Next-business-day funding — Money sent by ACH that typically lands in your account the next business day after approval and signing. Timing depends on the lender and your bank.
Laws and industry players
Truth in Lending Act (TILA) — The federal law requiring lenders to disclose the APR, finance charge, amount financed and total of payments before you sign.
CFPB — The Consumer Financial Protection Bureau, the federal agency that writes and enforces many federal consumer-finance rules.
NCUA — The National Credit Union Administration, which regulates federal credit unions and writes the PAL rules.
Military Lending Act (MLA) — Federal law capping most consumer credit to active-duty servicemembers and their dependents at a 36% MAPR and banning certain terms.
MAPR — Military annual percentage rate: an all-in cost measure under the MLA that includes finance charges, credit insurance and many fees.
Usury law — A state law setting the maximum interest a lender may charge. Many states set separate rules for licensed lenders.
State-licensed lender — A lender licensed to make loans in your state and required to follow that state's limits on amounts, fees and terms.
CSO / CAB — Credit services organization or credit access business: a business that arranges a loan from a separate third-party lender and charges its own fee. Texas uses this model for payday and title loans.
Tribal lender — A lender affiliated with a Native American tribe that may claim tribal sovereign immunity from some state laws. Its legal status is often disputed, so read the agreement's governing-law terms.
Loan-matching service (lead generator) — A company that collects your loan request and passes it to lenders that may be able to help. Zebra Finance is a loan-matching service: we don't make loans or credit decisions, and using our form is free.
Direct lender — The company that actually funds your loan, sets its terms and gives you the loan agreement.
Credit and approval terms
Hard inquiry — A credit check you authorize when applying for credit. It appears on your report and may lower your score slightly for a time.
Soft inquiry — A credit check that does not affect your score, such as many prequalification checks.
Prequalification — An early estimate of whether you may qualify and on what terms, often based on a soft inquiry. A final offer comes after the lender verifies your information.
Alternative credit data — Information outside the big three bureaus, such as specialty short-term-loan databases, bank account history or rent payments, that some lenders use to review applicants.
Debt-to-income ratio (DTI) — Monthly debt payments divided by gross monthly income. Lenders use it to judge whether a new payment fits your budget.
Co-signer — Someone who agrees to repay if you don't. Adding one can improve approval odds or terms but puts their credit at risk too.
Credit reporting — When a lender sends your payment history to Equifax, Experian or TransUnion. On-time payments on a reported installment loan can help build credit.
See these terms in action with the payday loan calculator or read how rates and fees work.
Ready to put these terms to work? Our free form takes about 3 minutes and can match you with lenders for $100 to $5,000, depending on your state. Your lender shows the exact APR and terms before you sign, and you're never obligated to accept. See if you qualify.
Frequently asked questions
What is the difference between APR and finance charge?
The finance charge is the total dollar cost of a loan, such as a $75 fee on a $500 payday loan at $15 per $100. APR expresses the cost of credit as a yearly percentage so loans of different sizes and lengths can be compared. Lenders must disclose both, along with the total of payments, before you sign.
What does rollover mean on a payday loan?
A rollover means paying just the fee on a payday loan so the due date moves to your next payday. You still owe the original amount, and a new fee is due on the new date. Many states limit or ban rollovers, and some require lenders to offer an extended payment plan instead. Check your state's payday loan page for the rules.
What is a cooling-off period for payday loans?
A cooling-off period is a waiting time some states require between paying off one payday loan and taking another. The length and rules differ by state, and not every state has one. If your state has one, a personal installment loan may still be available through our network. Check your state's payday loan page for the current rules.
What is deferred presentment?
Deferred presentment is the legal name many states use for payday lending. You give the lender a check or electronic debit authorization, and the lender agrees to wait to present it for payment until your next payday. State deferred presentment laws set the fees, loan limits and rollover rules that licensed lenders follow.
What is a CSO or CAB loan?
A CSO (credit services organization) or CAB (credit access business) arranges a loan from a separate third-party lender and usually charges its own fee on top of the lender's interest. Texas uses this model for payday and title loans. Your agreement lists both the lender's charges and the CAB fee, so check the total of payments.
What is a loan-matching service?
A loan-matching service, sometimes called a lead generator, takes one loan request and shares it with lenders that may be able to help. Zebra Finance works this way: the form is free, takes about 3 minutes, and you're under no obligation to accept an offer. The lender, not us, makes the credit decision and sets the terms.
Sources
- CFPB — What is a payday loan?
- CFPB — Do I have to put up collateral for a payday loan?
- eCFR — 12 CFR 701.21 (NCUA payday alternative loan rules)
- CFPB — What are my rights under the Military Lending Act?