Trulend glossary of personal loan terms
Last updated:
This trulend glossary defines the words you will meet on a personal loan request, offer and disclosure, with short examples in dollars so each term is easy to apply to your own numbers.
01
How to use the trulend glossary
Find the word from your personal loan offer or disclosure in the A–Z list below, read the two-to-four sentence definition, then check the dollar example against the numbers in front of you.
Terms are grouped alphabetically and each one has its own anchor in the trulend glossary, so you can bookmark or share a single entry, such as the definition of APR. People who arrive from searches for trulends reviews often use it to decode words they saw in other borrowers' comments. We kept every definition focused on small personal loans of $500 to $5,000, the range people usually mean when they search trulend or trulending. Where a word means something different for mortgages or credit cards, we describe only the personal loan meaning so the entry stays useful when you are reading an actual offer.
Personal loan terms from A to Z
Each definition below explains one borrowing term in two to four sentences, so you can check a word from a loan offer and get back to comparing with confidence.
Adverse action notice
A letter or email a lender must send when it declines your personal loan application or offers worse terms than you asked for. It lists the main reasons, such as a high debt-to-income ratio, and names the credit bureau used. Reading it tells you exactly what to fix before your next trulend request.
Amortization
The way each fixed payment is split between interest and principal over the life of an installment loan. On personal loans, early payments carry more interest, and later ones pay down more principal. On the sample $2,000 loan at 24%, the first $189.12 payment includes about $40 of interest, while the last includes under $4.
Amount financed
The amount of credit a personal loan actually provides to you, after any prepaid fees are subtracted. If you borrow $2,000 and the lender deducts a $100 origination fee, the amount financed is $1,900. It appears in a box on your Truth in Lending disclosure.
APR
Annual percentage rate, the yearly cost of borrowing expressed as a percentage, including interest and most lender fees. Estimated APRs on personal loans requested through our form range from 6.99% to 35.99%, and each lender sets its own. Because APR folds in the origination fee, it is a fairer comparison than the interest rate alone.
Autopay discount
A small rate reduction some lenders give when you let them draft payments automatically from your checking account. It is often a fraction of a percentage point. Autopay also helps you avoid late fees, but keep enough in the account on the draft date to prevent a returned payment.
Bank verification
A step where the lender confirms you own the checking account that will receive funds, sometimes by linking to your bank online or reviewing a statement. It may also be used to confirm income from regular deposits. Many trulend borrowers find linking faster than uploading documents.
Co-borrower
A second person who applies for personal loans with you and shares full legal responsibility for repaying the loan. Some lenders consider both incomes, which can help when one person's credit is thin. Every late payment shows up on both credit reports.
Collections account
A debt that the original creditor has handed to a collection agency after months of missed payments. It can stay on a credit report for up to seven years. A recent collection weighs more on a personal loan decision than an old, paid one.
Credit report
A record of your credit accounts, balances, payment history and inquiries kept by the major credit bureaus. Lenders read it to judge risk before making a trulending offer. You can request free copies and dispute errors, which may raise your score before you submit a request.
Credit score
A three-digit number, usually between 300 and 850, that summarizes the risk shown on your credit report. Higher scores tend to get lower APRs: estimates run near 7.99% to 15.99% for 720 and above and near 27.99% to 35.99% below 630. Lenders weigh it alongside income and existing debt when pricing personal loans.
Credit utilization
The share of your available revolving credit you are using, such as $900 owed on a $3,000 card limit, which is 30%. Lower utilization generally helps your score. Paying cards down a month before a trulend request can lift your score quickly.
Debt consolidation
Using one new loan to pay off several existing debts, leaving a single monthly payment. Consolidating with one of several trulending options saves money only if the new APR and fees are lower than what you pay now. Many people use small personal loans to consolidate two or three high-rate card balances.
Debt-to-income ratio
Your total monthly debt payments divided by your gross monthly income, shown as a percentage. Someone earning $3,000 a month who pays $750 toward debts has a 25% ratio. Many lenders of personal loans prefer a ratio under about 35% to 40% once the new payment is included.
Default
The status a loan reaches when you stop paying as agreed for an extended period defined in the contract. A default can lead to collections, added fees and serious credit damage. If you expect to miss a trulending payment, calling the lender early often opens up options such as a revised due date.
Disbursement
The moment the lender releases loan funds, usually by direct deposit to your checking account. Funding can arrive as soon as the next business day after approval, depending on the lender and your bank. The deposit equals the loan amount minus any origination fee.
Due date
The day each monthly payment must reach the lender. Many lenders of personal loans let you choose or change it so it lines up with your paycheck. Paying a few days early protects you from bank delays and late fees.
Early payoff
Repaying the full balance before the last scheduled payment. With simple interest and no prepayment penalty, early payoff cuts the total interest you owe. Ask the lender for a payoff quote on your trulend loan, since the exact amount depends on the date funds arrive.
Finance charge
The total dollar cost of the credit, including interest and certain fees, as listed on your disclosure. On the representative $2,000, 12-month loan at 24% with no fee, the finance charge is $269.44. Comparing finance charges shows which trulend offer costs less in real dollars.
Fixed rate
An interest rate that stays the same for the whole loan term. Most small personal loans use a fixed rate, which keeps the monthly payment identical from start to finish. That predictability makes budgeting easier than with a variable rate.
Grace period
A short window after the due date, often a few days to two weeks, before a late fee is charged. Not every lender offers one, and the length is set in your loan agreement. A payment made inside the grace period is usually not reported as late to the credit bureaus.
Hard credit inquiry
A full credit check a lender runs when you move forward with a formal application. It can lower your score by a few points for a short time and stays on your report for about two years. Lenders usually tell you before a hard inquiry happens, so a trulend pre-qualification never triggers one by surprise.
Identity verification
The checks a lender uses to confirm you are who you say you are, such as matching your photo ID, Social Security number, address and phone. It protects you against someone borrowing in your name. Having a clear photo of an unexpired ID ready speeds this step on personal loans.
Installment loan
A loan repaid in a set number of equal scheduled payments, such as 12 or 24 months. Personal loans are installment loans, unlike credit cards, which are revolving. On-time installment payments can help build a credit history.
Interest
The price a lender charges for letting you use its money, calculated on the balance you still owe. On personal loans it is quoted as an annual rate and charged monthly. Interest alone does not include fees, which is why the APR is the better comparison number.
Late fee
A charge added when a payment arrives after the due date and any grace period. It may be a flat dollar amount or a percentage of the missed payment, depending on the lender and state rules. Autopay and a due date aligned with the day your pay arrives are the simplest ways to avoid it.
Lender
The company that reviews your application, decides whether to approve it, sets the APR and terms, and funds the loan. Every lender that reviews a trulending request in our network makes its own decisions. You sign your loan agreement directly with the lender you choose.
Loan agreement
The binding contract between you and the lender that spells out the amount, APR, payment schedule, fees and what happens if you pay late. Read it fully before signing any personal loan, especially the sections on fees and early payoff. Keep a copy for the life of the loan.
Loan term
The length of time you have to repay, usually 6 to 36 months for personal loans of $500 to $5,000. A longer term lowers each payment but raises total interest. At 24%, $2,000 costs $189.12 a month over 12 months and $105.74 over 24 months.
Loan-matching service
A free service that passes one request form to several lenders so you can see offers without applying to each one separately. The service does not lend money, set rates or approve requests. A trulend request works this way: lenders decide, and you choose whether to accept.
Monthly payment
The fixed amount due each month that covers both interest and principal. Lenders compare it with your income to judge whether personal loans are affordable for you. A comfortable payment leaves room for rent, food and an unexpected bill in the same month.
Origination fee
A one-time charge some lenders add for processing a loan, estimated at 0% to 10% of the amount. It is often deducted from the funds you receive, so a 4% fee on $2,500 means $2,400 is deposited. The fee is included in the APR.
Pre-qualification
An early look at whether a lender may approve you and at what estimated rate, based on basic information and usually a soft credit inquiry. It is not a final approval, and terms can change after verification. Pre-qualified offers let you compare personal loans before any hard inquiry.
Prepayment penalty
A fee some lenders charge if you pay a loan off early. It is uncommon on small personal loans but still worth checking in the agreement. Without one, paying extra each month reduces the interest you owe.
Principal
The amount you borrowed, not counting interest or fees. Each payment reduces the principal a little, with more going to principal as the loan ages. Extra payments applied to principal shorten personal loans and cut interest.
Promissory note
The written promise you sign to repay a specific amount under set terms. It is often part of, or attached to, the personal loan agreement. Signing it electronically carries the same legal weight as signing on paper.
Representative example
A sample loan used to show typical costs in plain numbers. Ours is $2,000 over 12 months at a 24% APR with no origination fee assumed, costing $189.12 a month, $2,269.44 in total and $269.44 in interest. Your own offer may be higher or lower depending on the lender and your profile.
Returned payment fee
A charge added when a scheduled payment bounces because the account lacks funds or was closed. Your bank may charge its own overdraft or returned-item fee too, on top of what the trulend lender charges. Checking your balance two days before each draft helps avoid both.
Secured loan
A loan backed by collateral, such as a car title or savings account, that the lender can claim if you default. Secured personal loans may carry lower rates, but you risk losing the asset. Most personal loans requested through our form are unsecured instead.
Simple interest
Interest calculated only on the principal balance still owed, not on past interest. Most installment personal loans use it. Because interest shrinks as the balance falls, paying early or extra saves money.
Soft credit inquiry
A credit check that lets a lender review your file without affecting your score. It is commonly used for pre-qualification when you submit a trulend request. Only you can see soft inquiries on your report.
State rate cap
A legal limit some states place on the APR or fees lenders can charge on certain consumer loans. Caps vary widely by state and by loan size, which is why trulending offers can differ between neighbors across a state line. Where a cap applies, some lenders may not offer loans at all, or may offer only lower-rate products.
Thin credit file
A credit report with few accounts or a short history, common among younger adults and recent arrivals to the country. A thin file is not the same as bad credit, but it gives lenders of personal loans less to judge. Steady income and a healthy bank account can carry more weight in that case.
Total of payments
The full amount you will have paid once every scheduled payment is made, including principal and interest. For the representative $2,000 loan it is $2,269.44. Comparing this figure across trulending offers with the same amount financed shows which one costs less.
Truth in Lending disclosure
A standardized federal form that shows the APR, finance charge, amount financed and total of payments before you sign. Every lender must provide it for personal loans and other consumer installment loans. Its uniform boxes make two offers easy to compare line by line.
Unsecured loan
A loan approved based on your credit and income with no collateral pledged. Most small personal loans are unsecured, so nothing is repossessed if you fall behind, though your credit and the debt still suffer. Rates are usually higher than for secured loans because the lender takes more risk.
Variable rate
An interest rate that can rise or fall over the loan term based on a market index. Variable rates are uncommon on small personal loans but do exist. If you see one, ask how high the rate and payment could go.
02
Five personal loan terms to learn first
If you only read five entries, make them APR, origination fee, loan term, total of payments and soft credit inquiry. Together they explain almost every difference between two personal loan offers.
- APR tells you the yearly cost including most fees, so it is the best single number for comparing offers.
- Origination fee shows how much may be taken out before the money reaches you.
- Loan term sets the number of payments and drives both the monthly amount and the total interest.
- Total of payments is the full amount you will repay, which makes side-by-side comparison simple.
- Soft credit inquiry explains why checking offers through a trulend request usually doesn't move your score.
Once those five make sense, the estimated rates by credit tier and the personal loan calculator let you put real numbers next to each word and see how a change in one shifts the others.
03
Reading a personal loan disclosure with these terms
Every personal loan offer you accept comes with a Truth in Lending disclosure. Match its boxes to the entries for APR, finance charge, amount financed and total of payments, and you can check the math yourself.
Take the representative trulend example: $2,000 over 12 months at a 24% APR with no fee assumed. The amount financed is $2,000, the finance charge is $269.44, the total of payments is $2,269.44 and each monthly payment is $189.12. If an offer adds a 5% origination fee, the amount financed falls to $1,900 while the payments stay the same, and the APR rises. Our article on what APR includes walks through that calculation in detail.
Ready to compare personal loan offers?
One free request, about five minutes, and no obligation to accept any offer.