Glossary Of Loan Terms
from Direct Online Loans

Useful Glossary Of Loan Terms
from Direct Online Loans

This is a glossary of loan terms from Direct Online Loans to help you find your way around the loans business. For your convenience the glossary of loan terms has been listed alphabetically. By understanding some of the glossary of loan terms you will be able to better follow the loan application procedure. Also check out the following pages for more in formation: About Us, Contact Us, Privacy Policy, Articles, Links, Credit Score Calculator, Loan Definitions, Loan Calculator, Disclosure Policy, Disclaimer and Terms and Conditions.

Glossary of loan terms

Amortization: The period of time on which the repayment of loan principal and interest is based.

Assets: Anything of value which can be appropriated for the payment of debt.

Balloon Payment: The final payment of a loan with an amortization period that is longer than the loan term.

Borrower: The person legally responsible for a loan obtained from a bank or other financial institution.

Bridge Loan: Short-term loan made in anticipation of long-term funding or financing.

Collateral: The property a borrower pledges to a Lender to secure repayment of the loan.

Debt: Money, goods or services that one party is obligated to pay another in accordance with an expressed or implied agreement.

Default: Failure to pay a debt or meet an obligation.

Equity: Represents the difference between an asset s current market value and the amount of debt or other liabilities.

Fees: Charges by a Lender for making the loan.

Guarantee: A promise by one party to pay a debt or perform an obligation contracted by another if the original party fails to pay or perform according to a contract.

Interest Rate: The amount a Lender will charge for the use of its funds.

Lien: A claim a Lender places on property in return for making a loan.

Line of Credit: A set amount of money available for the Borrower to use.

Loan: Transaction wherein a Lender allows a Borrower the use of a sum of money for a specified period of time at a specified rate of interest.

Loan Agreement: A written contract between a lender and a borrower that sets out the rights and obligations of each party regarding a specified loan.

Loan Amount: The amount of a loan is determined by how much the Borrower needs to complete the project and the Lender s assessment of the Borrower s ability to repay.

Loan-to-Value Ratio: The ratio of money a Lender is willing to loan relative to the current appraised value of the property or other security.

Mortgage: Security instrument by which the Borrower (mortgagor) gives the Lender (mortgagee) a lien on property as collateral for the repayment of a loan.

Prime Rate: The rate of interest that serves as a benchmark for the interest rates banks will charge.

Principal: The original amount of money borrowed, and the amount that the Borrower must pay back, not including interest.

Security: Assets offered up as security against a loan, usually a property.

Term: The agreed upon period of time for which a loan is made.

Variable interest: Rate of interest on a loan that is tied to a stated index and changes annually.

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