Glossary of Loan Terminologies

The Annual Percentage Rate (APR) is the amount of interest on your loan amount that you'll pay annually averaged over the full term of the loan. The law requires lenders to disclose it when you borrow. The APR usually includes interest and any other borrowing costs such as application, origination, or early payment fees.

When we first present loan offers on our platform, we will show an estimated APR. At the time a loan is approved and is ready for e-sign, the loan agreement will include the actual APR.

The situation of having missed a loan payment. If you're up to date with your loan repayments with your current servicer, you're "in good standing." If you're late with a payment, you're "in arrears."

Anything you own that has economic value. Assets help you achieve your life goals, such as savings for education.

The outstanding unpaid amount of a loan.

In a loan agreement, the one who receives money and agrees to repay the balance.

A service offered by some lenders that provides you with instant cash. A cash advance may have a high interest rate, added fees, and stricter repayment terms.

Property that you promise to give to a lender in the event you fail to repay a loan. You must have collateral to get a secured loan. Mortgages and auto loans are secured loans. The house or car title is collateral. If you don't repay, the lender may take ownership of the house or car.

Loans found on our Personify platform are unsecured personal loans, and do not require collateral.

A company that maintains a record of a consumer’s borrowing history. Equifax, Experian, and TransUnion are the biggest U.S. credit reporting bureaus. Each one calculates a credit score for you based on the information they have, using a formula that they have developed.

Information from credit reporting bureaus protects both lenders and borrowers. Lenders are able to make informed credit decisions as to their applicants for loans which will have a direct impact on the rates and terms they may offer.

The largest amount of money that a lender will lend a customer. On a credit card, it's the maximum amount that they will allow you to use without repayment. Some credit cards have predetermined credit limits. Some credit card companies use your credit history and income to set your credit limit.

A term usually used to refer to the creditworthiness of a business, state authority, or government. Your credit rating is your credit score.

A person’s track record of borrowing. Credit bureaus such as Experian, Equifax, and TransUnion each have their own scoring system. Lenders use a credit score to estimate how risky it would be to lend money to someone. Lending money includes

• Offering a credit card
• Providing an auto loan
• Approving a mortgage
• Making an unsecured installment loan

The higher a person's credit score, the less risky a lender will typically consider that person to be. Higher credit scores generally come from paying bills on-time, and borrowing and repaying successfully time and again. Missing payments or failing to repay debts generally lowers your score.

Your credit score makes a difference. It can affect the amount of money lenders are willing to provide. It can affect the interest rate you'll pay. It can limit the amount of time a lender will allow you to repay a loan. A higher credit score will usually earn you better loan terms.

While we take your credit score into consideration, it's not the only thing we look at when deciding on your online personal loan application.

Generally viewed as the extended failure to meet a financial obligation or loan agreement that places the lender in fear of your inability to make future payments.

Full payment of your loan balance before completion of your loan term. Some lenders charge fees or penalties for early repayment. Any loan sourced through the Personify platform will not have early repayment fees.

An interest rate that stays the same over the entire loan term. A fixed interest rate loan is beneficial for borrowers if interest rates go up during the loan term.

A person’s total income before taxes or other deductions. This is sometimes called “pre-tax” income. This is a significant factor when lenders decide if you will qualify for a loan.

Generally, a loan which is scheduled to be paid back in equal installments. In certain situations, your last payment might differ, depending on your payment history. Having a fixed sum as your payment obligation makes it easier to budget payments. Loans from our Personify platform are installment loans.

Interest is the cost of using a lender's money. A borrower pays interest, and a lender earns interest.

The percentage of the amount you borrow that you pay in interest is your interest rate. By law, the lender must disclose this as an Annual Percentage Rate. The interest rates that a lender charges depends on many things such as:

• The lender's cost of getting money to lend
• Competition from other lenders
• The borrower's credit score
• The amount borrowed and for how long
• The borrower's relationship with the lender

Lenders calculate interest rates in different ways. Some lenders charge fees instead of a higher interest rate. By law, your lender must tell you a loan's Annual Percentage Rate or APR.

The amount of interest paid over a loan’s term.

The interest cost included in a single loan repayment. It’s also called “accrued interest.”

The percentage of the total amount of a loan that a lender charges a borrower. By law, a lender must also convert the interest rate into the Annual Percentage Rate or APR for short.

A fee that may be charged to a borrower for not making a timely loan payment according to the terms of the Loan Agreement.

A legal contract between a lender and a borrower. The loan agreement details the obligations and responsibilities of the lender and the borrower. It includes all the details of the loan such as:

• Interest rate, including the Annual Percentage Rate (APR)
• Loan costs for the borrower, including fees
• Repayment schedule, including Installment amounts and due dates
• What would happen if the borrower misses payments or fails to pay back the loan according to the terms of the Loan Agreement

In a Loan Agreement, the party that provides the funds.

The largest amount a borrower is qualified to borrow or which the state provides for such a transaction.

An origination fee is charged by a lender when you enter into a loan agreement.

This is different from an application fee (Personify Financial does not charge an application fee), which is a fee some lenders charge just to apply for a loan, regardless of whether you're approved or not. We don't charge a fee to submit an application on our platform.

An origination fee may be required on some loans. To see if an origination fee is applicable in your state, see our Rates, Terms and Licensing Information page. If an origination fee is applicable, it will be 5% of the loan amount you receive. It’s a one-time fee you pay for over time as part of your scheduled loan payments.

• We charge it at the time we approve your loan and you e-sign your loan agreement
• We add it to the amount that you receive instead of subtracting it, so you have use of the full amount that you asked to borrow
• It's a one-time fee you pay for over time as part of your scheduled loan payments

A loan to an individual from a lender. Personal loans are usually unsecured so there is no collateral involved.

A benchmark interest rate used by US banks to set other rates. The prime interest rate comes from the rate that banks charge each other.

Banks use the prime rate to set the interest rates they charge their customers. "Prime" customers may be able to borrow at or below the prime rate.

The amount borrowed on a loan. When you make a payment on a loan, the principal goes down by the amount of the payment less the interest portion of the payment. Generally, when the principal reaches $0, you've paid off the loan.

The percentage a lender uses to calculate a loan's interest. The rate and amount borrowed determine a loan's interest cost.

A loan that requires a borrower to pledge an asset such as a car title or property as collateral.

Lenders like secured loans because they reduce risk. If a borrower fails to repay a secured loan, the lender may repossess or foreclose the asset. They can offset any losses from the default by selling or using the asset.

The contractual amount of time that a borrower has to pay back a loan. It's easy to tell the term of a mortgage loan because it's called a 30-year or 15-year mortgage. Loans on the Personify platform have 12-, 18-, 24- or 36-month terms. See our Rates, Terms and Licensing Information page for details. "Loan terms" also means the obligations and specifics of a loan agreement. Lenders make repayment schedules so the principal and interest paid every month satisfy the loan at the end of the term. Repayments for loans found on our platform are scheduled at equal intervals throughout the term of a loan. Installment amounts are generally all the same too, so payments are easier to budget. You can usually pay back a loan before the end of the term. Some lenders make you pay an early repayment penalty. There's no penalty for repaying early a loan sourced from our platform.

When a borrower pays less than the full amount due for a loan payment. The lender will usually charge a late fee if a borrower underpays. The lender may report the underpayment as a late payment to credit bureaus.

A loan that isn’t secured by collateral (an asset or assets). Without an asset to secure a loan, the lender relies on your creditworthiness to assess your ability to repay the loan. Some lenders will take a close look at your credit and work history. To know you better, Personify Financial looks at more than just your credit score and work history, adding a unique understanding of you and your creditworthiness.

A loan interest rate that can change during the term of a loan. A lender will adjust a variable interest rate based on a benchmark or index rate as spelled out in the loan agreement. You might want a variable rate loan if you think interest rates will go down while you have the loan. If that happens, your interest rate will drop and you'll save money compared to having a fixed interest rate loan. Similarly, you run the risk of increased payments in the event that interest rates rise. Only fixed rate loans are offered on the Personify platform.