Glossary of personal loan and direct tribal loans terms

Every term below is defined in two to four sentences, with an anchor link you can share. Jump to a letter, or scroll through the full list in alphabetical order.

ABCDEFGHILMOPRSTU

A

Amortization

The process of paying off a loan through regular payments that cover interest and principal. Early payments are mostly interest; later payments are mostly principal. An amortization schedule lists every payment and how it is split.

Amount financed

The money you actually receive, or that is paid on your behalf, after any prepaid finance charges such as an origination fee are subtracted. It appears in the federal disclosure box.

Annual percentage rate (APR)

The yearly cost of a loan as a percentage, including interest and most upfront fees. APR is the best single number for comparing loans of the same amount and term.

Arbitration clause

A contract term requiring disputes to be resolved by a private arbitrator instead of a court. Many tribal loan agreements include one. Read it to understand how you would raise a complaint.

Autopay

An arrangement that lets the lender debit your checking account automatically on each due date. Autopay reduces missed payments, and some lenders offer a small rate discount for using it.

B

Balance

The amount you still owe on a loan, including unpaid principal and any accrued interest or fees. Your payoff quote shows the exact balance on a specific date.

Balance transfer

Moving debt from one credit card to another, often to take advantage of a low or 0% introductory rate. A transfer fee of 3% to 5% usually applies.

Bankruptcy

A legal process that can eliminate or restructure debts. Most lenders decline applicants in an open bankruptcy and may restrict lending for some time after discharge.

Buy now, pay later

A short-term plan that splits a purchase into a few payments, often four over six weeks with no interest. Longer plans can charge interest similar to a personal loan.

C

Cash advance

Borrowing cash against a credit card limit. Advances usually carry a higher APR than purchases, a fee of 3% to 5% and no grace period, so interest starts the same day.

Charge-off

An accounting step a lender takes when it no longer expects to collect a debt, usually after about six months of missed payments. The debt is still owed and may go to collections.

Co-applicant

A second person who applies with you and shares responsibility for repayment. A co-applicant with steady income or strong credit can improve approval odds and rates.

Collateral

Property pledged to secure a loan, such as a car or savings account. Most personal loans from $500 to $5,000 are unsecured and need no collateral.

Credit report

A record of your credit accounts, payment history and public records kept by bureaus such as Equifax, Experian and TransUnion. You can get free copies at annualcreditreport.com.

Credit score

A three-digit number that summarizes your credit report. FICO scores run from 300 to 850; higher scores usually earn lower rates.

Credit union

A member-owned financial cooperative. Many credit unions offer small personal loans and payday alternative loans at lower APRs than other lenders.

D

Debt consolidation

Combining several debts into one new loan with a single payment. It saves money only when the new loan's total cost is lower than the debts it replaces.

Debt management plan

A repayment program arranged by a nonprofit credit counselor that combines unsecured debts into one monthly payment, often with lower card interest rates. It usually requires closing the enrolled cards.

Debt-to-income ratio (DTI)

Your total monthly debt payments divided by your gross monthly income. Many lenders prefer a DTI below about 36% to 40%, including the new loan.

Default

Failure to repay a loan as agreed, usually after several missed payments. Default can lead to collections, fees and damage to your credit.

Direct lender

A company that makes and funds the loan itself, as opposed to a service that connects borrowers with lenders. The lender named in your agreement is the direct lender.

Disclosure box

The standard federal table on a loan offer showing APR, finance charge, amount financed and total of payments. It is required under the Truth in Lending Act.

Due date

The day each payment must reach the lender. Many lenders let you align it with your payday; changing it later may be possible on request.

E

Early payoff

Repaying a loan before the final scheduled date. Most installment lenders allow it without a penalty, which saves the interest on the remaining term.

Earned wage access

A service that lets you draw wages you have already earned before payday, often through an app or your employer, for a flat fee or optional tip.

F

Finance charge

The total dollar cost of credit, including interest and prepaid fees, if you make every payment on schedule. It appears in the disclosure box.

Fixed rate

An interest rate that stays the same for the life of the loan, so every payment is identical. Most small personal loans have fixed rates.

G

Grace period

A short window after the due date during which a payment can be made without a late fee. Not every lender offers one, so check the agreement.

H

Hard inquiry

A credit check that appears on your report and can lower your score by a few points. Lenders usually run one before final approval of a loan.

I

Installment loan

A loan repaid in equal scheduled payments over a set term. Most personal loans, including most direct tribal loans, are installment loans.

Interest

The cost of borrowing money, charged as a percentage of the outstanding principal. On installment loans it is usually calculated daily or monthly.

L

Late fee

A charge added when a payment arrives after the due date or grace period. Late fees are usually a flat amount or a percentage of the payment.

M

Military Lending Act

A federal law that caps the cost of most consumer credit to active-duty service members and their dependents at 36% MAPR and bans certain loan terms.

O

Origination fee

An upfront charge for processing a loan, often 1% to 10% of the amount. It is either deducted from the deposit or added to the balance, and it raises the APR.

Overdraft

A negative balance in a checking account when a payment or purchase exceeds available funds. Repeated overdrafts in recent months often lead lenders to decline a personal loan request.

P

Payday alternative loan (PAL)

A small loan from a federal credit union, from $200 to $2,000, with APR capped at 28% and terms of one to twelve months.

Payment schedule

The list of every due date and payment amount on an installment loan. It appears in the agreement and lets you plan each payment against your paydays.

Payoff quote

A statement from the lender showing the exact amount needed to close a loan on a given date. Interest accrues daily, so quotes expire after a few days.

Personal loan

A loan for personal use, usually unsecured, repaid in fixed installments. Amounts in our network range from $500 to $5,000.

Prepayment penalty

A fee for paying a loan off early. Most small personal loans do not have one, but the agreement will say if it does.

Prequalification

An early estimate of whether you might qualify and at what rate, usually based on a soft credit check. It is not a final offer, and terms can change after full review.

Principal

The amount borrowed, not counting interest or fees. Each payment reduces principal by the portion that is not interest.

R

Refinance

Replacing an existing loan with a new one, usually to get a lower rate or a different term. Refinancing a high-cost loan can save money if the new APR is lower.

Returned-payment fee

A charge when a scheduled payment fails because of insufficient funds. Your bank may add its own overdraft or returned-item fee.

Revolving credit

Credit you can borrow, repay and borrow again up to a limit, such as a credit card or line of credit. Payments vary with the balance.

S

Same-day funding

Delivery of loan funds on the same business day you sign. Lenders advertising same day tribal loans usually require signing before a morning cutoff and may charge higher rates for speed.

Soft inquiry

A credit check that does not affect your score, such as a prequalification check. Only you can see soft inquiries on your report.

Sovereign immunity

A legal doctrine that protects federally recognized tribes and their businesses from certain lawsuits. Tribal lenders rely on it to follow tribal law instead of state law.

Specialty credit bureau

A consumer reporting agency, such as Clarity Services or DataX, that tracks short-term and online loans. Many tribal and online lenders check these bureaus.

State-licensed lender

A lender licensed by your state's regulator that must follow state rules, including any rate caps. Complaints can go to that state agency.

T

Term

The length of time you have to repay a loan, usually stated in months. Longer terms lower the payment but increase total interest.

Total of payments

The sum of all payments you will make if you pay on schedule. It equals the amount financed plus the finance charge.

Tribal lender

A lending business owned by a federally recognized tribe and governed by tribal law. Tribal lenders often charge more than state caps allow.

Truth in Lending Act (TILA)

A federal law requiring lenders to disclose the APR, finance charge and other key terms before you sign a consumer loan.

U

Unsecured loan

A loan with no collateral, approved on the basis of income and credit. Most personal loans and direct tribal loans are unsecured.

Utilization

The share of your credit card limits you are using. Keeping it below about 30% helps your credit score.