Payday Loan Glossary

Annual Percentage Rate (APR): This is the true or effective interest rate.  The interest rate includes all finance charges and the amount financed.

 

Bad credit: A term synonymous with lack of credit worthiness.  Characterizes borrowers who are unable to make their payday loan payment on time or not at all and must take out a bad credit loan

 

Caps: Strict governmental limits placed upon the cash advance and payday loan lenders as to the maximum interest rates that can be charged for loans.

 

Cash advance: Another name for a payday loan. It is shot-term personal loan used by borrowers to cover urgent cash needs until the next payday. 

 

Credit check: An important step in approving a payday loan. Loan lenders evaluate the borrowers’ credit histories before deciding to approve or disapprove the payday loan applications. 

 

Delinquency: The inability of borrowers to meet their debt obligations.

 

Direct deposit: The payday loan funds are electronically deposited into the borrower's bank account.

 

Extension: More time requested by the borrower to pay-off the payday cash advance loan.  

 

Faxless payday loan: A popular online method of applying for a cash advance without faxing an application to the lender.

 

Finance charge: The interest rate on the payday loan amount that payday loan borrowers must pay.  Included in the total loan repayment.

 

Interest rate: A rate that a payday advance lender charges to the borrower for the loan. 

 

Payday advance: Same as a cash advance. See definition of Cash Advance. 

 

Payday Lender: The financial institution that issues payday loans.

 

Personal loan: An unsecured payday loan that is a short term loan, mainly used in emergency situations. 

 

Principal: The amount of the payday loan borrowed, excludes interest.

 

Renewal:  Renewing your existing payday loan.  A new loan is generated and the old one is paid off, includes applicable fees.  Also, the renewed payday loan is due by the next pay period.

 

Rollover: The payday loan lender agrees to extend the payday loan to an agreed upon renewed repayment term.