Glossary

Payday Loans Glossary of Common Terminology

APR
This is a measuring tool used by the loan industry. This is the amount of interest charged to a customer per annual year.
Bankruptcy
This is a state of being by an individual that is no longer able to pay the money it owes. The individual would need to go to court, where it would meet with the lenders who are owed money. The court will set up special provisions going forward to repay as much of the money as possible. In most cases the lenders will only receive a portion of their loans back. Someone that goes through bankruptcy will have a hard time getting loans in the future because usually their credit ratings are destroyed in the process.
Collateral
This is the process where when you take out a loan, you will give some valuable item up as collateral that in case you cannot repay the loan, then the collateral will be given to the lender instead to make up the difference for the experience they lost. For example, if you take out a loan for a new boat, you may put up your car as collateral, that if you can’t make payments on the boat, they will come take your car and settle the loan.
Compound Interest
This is a type of interest that some types of loans use, especially payday loans, that is calculated on the principle as well as the paid interest that had previously been charged. Usually this amount is charged monthly which is why the APR interest rate is sometimes near 300%.
Default
This is when someone fails to pay back a loan. This is a term that’s similar to a Delinquent, however a delinquent is someone that still has the means and willingness to pay back the loan where as if someone defaults, they are still responsible for paying back the loan, but may not either choose to or won’t be able to for a very long time if at all.
Delinquency
This term defines someone who fails to pay their payday loan or other type of loan by the date specified when the loan was requested. Anyone that falls delinquent on a loan still is able to pay back the loan, but usually becoming delinquent on an account will hurt the credit rating of the individual and they will have to pay an even higher amount of interest to pay back the loan.
Interest
This is a type of fee added on to the original principal for taking out a loan. This is the amount of money that makes the lender willing to let someone borrow money. Usually this amount is considered by many to be really high on a payday cash advance loan compared to other forms of loans, however compared to other types of quick money, that might not necessarily be true.
Payday Loan
This is the same thing as a short-term loan or a short-term high interest loan. Usually the interest rate on this type of loan can be as high as 300% APR. Anyone interested in receiving a payday loan should be aware of the amount of compounded interest when getting a payday loan.
Payday Loans Online
This is the same thing as a Payday Loan, however this type of loan is conducted solely through the internet and electronic methods. The means that once you supply you bank information and your loan is approved, you will receive a kind of wire transfer/direct deposit directly to your account. This is how FastPaydayCashAdvanceLoans.com works.
Principal
This is the initial amount of the loan before the interest is charged. For example if you bought a car for $21,000 that would be the amount of the principal, and anything charged by the financial institution of where you get the loan from would be additional interests and fees. It’s important when repaying a loan to pay back as much of the principal as possible, because that will help repay the loan faster, but also should reduce the amount of interest each month. If you are in a loan where you are making monthly payments only on the interest on that loan, then you need to look at making larger payments on that loan to help decrease the principal, or you need to look at refinancing the loan if possible to help lower the amount of interest.
Refinancing
This is the process that a lot of loaners go through when they are having troubles repaying their current loans. A refinance is usually where you will either renegotiate with your current lender, or find another lender that will either consolidate a lot of different loans into one big loan or just take an existing loan and change the conditions on the loan so that the interest rate may be lower.