Loan Fundamentals
The amount of money borrowed.
Principal
Borrowing money to buy now and pay later.
Credit
The time you have to repay a loan.
Term
A loan for buying a home, secured by the property.
Mortgage
Unfair lending practices that take advantage of borrowers.
Predatory Lending
The cost of borrowing money, shown as a percentage.
Interest Rate or APR (Annual Percentage Rate)
A card that allows you to borrow money for purchases.
Credit Card
The amount paid each month to repay the loan, which includes principal and interest.
Monthly Payment
A mortgage with a constant interest rate.
Fixed-rate Mortgage
A short-term loan due on your next payday, usually with high fees.
Payday Loan
A loan backed by collateral, which the lender can claim if the borrower fails to repay.
Secured Loan
The amount of money still owed on a loan or credit account.
Outstanding Balance
The price that a manufacturer recommends retailers charge for a product, typically used for vehicles.
MSRP (Manufacturer's Suggested Retail Price)
A mortgage with a changing interest rate.
Adjustable-rate Mortgage (ARM)
Illegal lending practices that often involve high-interest rates and aggressive collection methods.
Loan Sharking
Paying back a loan in regular, fixed amounts over time.
Amortization
A number that shows how reliable you are with money, usually between 300 and 850. It helps lenders decide if they should give you a loan or credit. A higher score means you’re seen as less risky.
Credit Score
A contract outlining the terms and conditions of the auto loan, including interest rate, payment schedule, and penalties.
Loan Agreement
An upfront payment when buying something big, like a home.
Down Payment
A fee charged for paying off a loan early, which can trap borrowers in high-interest loans.
Prepayment Penalty
A measure of how much debt you have compared to your income.
Debt-to-Income Ratio
The maximum amount of credit the cardholder can use.
Credit Limit
An initial evaluation by a lender to determine how much money a borrower can qualify for before shopping for a vehicle.
Pre-approval
A schedule showing each loan payment breakdown.
Amortization Table
Loans offered to borrowers with poor credit histories, often at much higher interest rates.
Subprime Lending