Payday Loan Glossary

Asset - Anything owned by an individual that has a cash value. This includes property, goods, savings or investments.

Assumption - The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money since this is an existing mortgage debt.

Average Daily Balance - The average daily balance is a method used to calculate finance charges. It is calculated by adding the outstanding balance on each day in the billing period, and dividing that total by the number of days in the billing period. The calculation includes new purchases and payments.

Bad Credit - A term used to describe a poor credit rating. Common practices that can damage a credit rating include making late payments, skipping payments, exceeding card limits or declaring bankruptcy. "Bad Credit" can result in being denied credit.

Balance - The total amount of money owed. It includes any unpaid balance from the previous month, new purchases, cash advances, and any charges such as an annual fee, late fee or interest. The balance should not be confused with the monthly payment (the minimum payment allowed each month), which is generally 2% - 5% for revolving credit cards.

Balance Transfer - Moving a balance (debt) from one credit card to another. This is often done with special checks or forms, or may be offered as an option on some credit card applications. The usual reason is to shift an ongoing debt to an account with a lower interest rate.

Bankruptcy - Bankruptcy is a legal declaration of the inability to repay debts. Bankruptcy should be viewed as a last resort. It will have a severe impact on a credit rating and will remain on a credit report for ten years. Furthermore, bankruptcy is not a solution in all cases. Federal student loans, Federal tax debt and child support are all exempt from bankruptcy protection. Bankruptcy agreements vary but there are two types of agreements that most people choose: Chapter 7 and Chapter 13.

Chapter 7 - In a Chapter 7 agreement, the court resolves most debts by selling assets and property so that the filer is given a fresh financial start. The court takes all assets including cars, homes, furnishings, jewelry or anything else of value. The assets are sold to pay off the debt. There are some debts that a person may wish to repay on their own instead of having the court resolve it. This is called reaffirmation. Reaffirmation is a special payment plan with the court. For example, if a car loan is reaffirmed, the person keeps the car and makes payments under new terms. Chapter 7 bankruptcy will not eliminate debts due to taxes, child support, alimony, student loans, court fines or personal injury caused by driving drunk or under the influence of drugs. A Chapter 7 filing will remain on a credit report for 10 years.

Chapter 13 - In a Chapter 13 agreement, the court creates a debt repayment plan that allows the filer to keep their property. In order to file Chapter 13, a person must have a source of income and promise to pay part of their income to creditors. The court allows the filer to keep any assets that have debts against them if they pay them off under terms determined by the court. A Chapter 13 filing will remain on a credit report for 10 years. With Chapter 13, there is a better chance of obtaining future loans and credit.

Beacon Score - This is your credit score that creditors look at when determining if you are credit worthy. Your Beacon Score is determined by negative entries such as late payments which would decrease your score or a positive, timely payment history on your accounts which would increase your score.

Billing Cycle - The number of days between statement dates. This is generally about 25 days.

Buydown - A lump sum payment made to the creditor by the borrower or by a third party to reduce the amount of some or all of the consumer's periodic payments to repay the indebtedness.

Cash advance loan - a loan where a borrower gets cash advanced based on his paycheck. These loans generally up are up $500 and must be repaid on the next payday.

Closed-end Credit - Generally, any loan or credit sale agreement in which the amounts advanced, plus any finance charges, are expected to be repaid in full over a definite time. Most real estate and automobile loans are closed- end agreements.

Collateral - Property that is offered to secure a loan or other credit and that becomes subject to seizure on default. (Also called security.)

Conditionalities - Extra requirements other than repayment (such as 'structural adjustment' policies) demanded by the lender before new loans are granted.

Cosigner - Another person who signs for a loan and assumes equal liability for it.

Credit - The promise to pay in the future in order to buy or borrow in the present. The right to defer payment of debt.

Creditworthiness - A creditor's measure of a consumer's past and future ability and willingness to repay debts.

Credit Card - Any card, plate, or coupon book that may be used repeatedly to borrow money or buy goods and services on credit.

Credit History - A record of how a person has borrowed and repaid debts.

Credit Scoring System - A statistical system used to determine whether or not to grant credit by assigning numerical scores to various characteristics related to creditworthiness.

Debt service - Total payments due on loans (repayments plus interest).

Default - Failure to meet the terms of a credit agreement.

Discharge - A legal terms meaning a court has erased your debt(s) not to be confused with a "charge off" or "write off" which is an accounting term which does not erase debts.

Discount - An amount deducted from the regular price for those who purchase with cash instead of credit.

Finance Charge - The total dollar amount paid to get credit.

Fixed Rate - A traditional approach to determining the finance charge payable on an extension of credit. A predetermined and certain rate of interest is applied to the principal.

Graduated Payment - Repayment terms calling for gradual increases in the payments on a closed-end obligation. A graduated payment loan usually involves negative amortization.

Liability - Legal responsibility to repay debt.

Lien - a notice a creditor attaches to your property that tells the world that you owe the creditor money. You cannot sell the property without paying off the creditor because the lien makes the "title" (history of ownership) cloudy and a new owner won't buy under those conditions.

Negative Amortization - Repayment schedule calling for periodic payments that are insufficient to fully amortize the loan. Earned but unpaid interest is added to the principal, increasing the debt. Eventually, payments must be rescheduled to fully pay off the debt. phentermine xenical

Open-end Credit - A line of credit that may be used repeatedly up to a certain limit, also called a charge account or revolving credit.

Open-end Lease - A lease that may involve a balloon payment based on the value of the property when it is returned. (Also called finance lease.)

Overdraft Checking Account - A checking account associated with a line of credit that allows a person to write checks for more than the actual balance in the account, with a finance charge on the overdraft.

Payday Loan - a loan where a borrower gets cash advanced based on his paycheck. These loans generally up are up $500 and must be repaid on the next payday.

Points - Finance charges paid by the borrower at the beginning of a loan in addition to monthly interest; each point equals one percent of the loan amount.

Principal - Amount of the loan.

Renegotiable Rate - A type of variable rate involving a renewable short- term "balloon" note. The interest rate on the loan is generally fixed during the term of the note, but when the balloon comes due, the lender may refinance it at a higher rate. In order for the loan to be fully amortized, periodic refinancing may be necessary.

Reschedule - Revised timetable for loan repayments, usually granting longer repayment periods and often involving new loans to pay old ones

Security Interest - The creditor's right to take property or a portion of property offered as security.

Seller's Points - A lump sum paid by the seller to the buyer's creditor to reduce the cost of the loan to the buyer. This payment is either required by the creditor or volunteered by the seller, usually in a loan to buy real estate. Generally, one point equals one percent of the loan amount. phentermine diet pills

Service Charge - A component of some finance charges, such as the fee for triggering an overdraft checking account into use.

Statement - The monthly bill from a credit card issuer that describes and summarizes the activity on an account. A statement includes the outstanding balance, purchases, payments, credits, finance charges and other transactions for the month. also see phentermine prescriptions

Statement Date - The date on which a statement is generated, and the month's finance charges (interest) are added to the balance.

Surcharge - An extra charge imposed on those who purchase with a credit card instead of cash. (Currently, surcharges for credit card purchases are prohibited.)

Variable Rate - A variable rate agreement, as distinguished from a fixed rate agreement, calls for an interest rate that may fluctuate over the life of the loan. The rate is often tied to an index that reflects changes in market rates of interest. A fluctuation in the rate causes changes in either the payments or the length of the loan term. Limits are often placed on the degree to which the interest rate or the payments can vary.