Great meadow credit glossary of loan terms

Terms from A to C cover how a personal loan is priced and how your credit is measured, including APR, amortization, credit reports, credit scores and credit utilization. Each definition below is written for borrowers comparing offers after a great meadow credit request.

Adverse action notice

An adverse action notice is a letter or message a lender sends when it declines an application or offers worse terms than requested. It explains the main reasons or tells you how to ask for them, and it names the credit bureau the lender used. Read it closely, because it shows exactly what to work on before your next request.

Amortization

Amortization is the process of paying off a loan through equal scheduled payments that cover both interest and principal. Early payments go mostly toward interest, and later payments go mostly toward principal. An amortization schedule lists every payment, showing how much of each one reduces the balance.

Annual percentage rate (APR)

The annual percentage rate is the yearly cost of borrowing, expressed as a percentage, that combines the interest rate with most required fees such as an origination fee. Because it folds those costs together, APR is the best single number for comparing two personal loan offers, including any you see after a great meadow credit request. Lenders in our network show APRs from about 5.99% to 35.99%, set by each lender after review.

Autopay

Autopay is an arrangement that lets a lender withdraw your monthly payment from your checking account automatically on the due date. It lowers the chance of a missed personal loan payment, and some lenders give a small rate discount for enrolling. Keep enough money in the account to cover each withdrawal so the payment does not bounce.

Balance transfer

A balance transfer moves debt from one credit card to another, usually to take advantage of a low promotional rate. Transfers often carry a fee of a few percent and a rate that jumps when the promotion ends. People researching great meadow credit options sometimes compare a balance transfer with a fixed-rate personal loan for consolidating card debt.

Co-signer

A co-signer is a second person who signs a loan agreement and becomes legally responsible for repayment if the main borrower does not pay. A co-signer with strong credit can help a personal loan applicant qualify or receive a lower rate. Not every lender accepts co-signers, and missed payments affect both people's credit.

Collateral

Collateral is an asset, such as a car or savings account, pledged to secure a loan. If the borrower stops paying, the lender can take the collateral to recover its money. Most small personal loans arranged through great meadow lending requests are unsecured, meaning no collateral is required.

Credit bureau

A credit bureau is a company that collects information about how people borrow and repay, then sells credit reports to lenders. The three national bureaus are Equifax, Experian and TransUnion. Personal loan lenders may report to one, two or all three, so your reports can differ slightly from one bureau to another.

Credit limit

A credit limit is the maximum amount you can borrow on a revolving account such as a credit card or line of credit. Your balance compared with your limit determines your credit utilization. Installment loans do not have a credit limit; they have a fixed loan amount paid out once.

Credit report

A credit report is a record of your credit accounts, balances, payment history, collections and recent inquiries kept by a credit bureau. Lenders reviewing a great meadow credit request use it to judge how you have handled debt. You can request free copies from each bureau and should dispute any account or late payment that is not accurate.

Credit score

A credit score is a three-digit number, usually between 300 and 850, that summarizes the information in your credit report. Payment history and credit utilization carry the most weight. Personal loan lenders use scores alongside income and debts, so the same score can lead to different offers from different lenders.

Credit utilization

Credit utilization is the share of your available revolving credit that you are currently using. A $1,200 balance on a $4,000 card limit equals 30% utilization. Lower utilization generally helps your score, which is one reason paying down cards with a consolidation loan can improve credit over time.

Terms from D to F explain how lenders measure what you already owe, what happens when payments stop, and how loan money reaches your account. The debt-to-income ratio is the term most borrowers need to understand.

Debt consolidation

Debt consolidation means combining several debts, often credit card balances, into one new loan with a single monthly payment. A consolidation personal loan saves money only if the new APR and fees cost less than the debts being replaced. People exploring great meadow loans for consolidation usually compare the total repaid under both options before deciding.

Debt-to-income ratio (DTI)

Debt-to-income ratio compares your total monthly debt payments with your gross monthly income. If you pay $1,500 a month toward rent and debts on $4,000 of gross income, your DTI is 37.5%. Many lenders prefer a DTI below about 36% to 40% after the new payment, and the eligibility requirements page walks through a full example.

Default

Default happens when a borrower fails to repay a loan as agreed, usually after several missed payments. The lender may then send the account to collections, add fees and report the default to credit bureaus, which can lower a score sharply. Contacting the lender before a payment is missed often opens more options.

Direct deposit

Direct deposit is an electronic transfer of money straight into your bank account. Most lenders send personal loan funds by direct deposit to the checking account you name in your application. Regular paychecks arriving by direct deposit also help lenders verify that your income is steady.

Disbursement

Disbursement is the moment a lender releases loan funds to you, usually by depositing them into your checking account. Through lenders in our network, disbursement can happen as soon as the next business day after approval, depending on the lender. Any origination fee is often deducted before the money is sent.

Due date

A due date is the day each loan payment must reach the lender. Paying a personal loan after it can trigger a late fee, and a payment 30 or more days late can be reported to credit bureaus. Many lenders let you move the due date so it falls shortly after your paycheck arrives.

Fixed rate

A fixed rate is an interest rate that stays the same for the life of the loan. With a fixed rate, your monthly payment does not change, which makes budgeting simpler. Most personal loans in the $500 to $5,000 range carry fixed rates rather than variable ones.

Terms from G to L cover credit checks, identity checks, the kinds of loans available and the agreement you sign. Knowing the difference between hard and soft inquiries helps you protect your credit score while comparing offers from a great meadow credit request.

Grace period

A grace period is a short window after the due date during which a payment can arrive without a late fee. Not every lender offers one, and the length varies, often from a few days to about two weeks. A grace period does not change the due date, and interest usually keeps accruing.

Hard inquiry

A hard inquiry is a full credit check a lender runs when you formally apply for credit. A hard inquiry appears on your credit report for about two years and can lower your score by a few points for several months. Lenders typically run one after you accept an offer and complete their application, not when you first submit a great meadow credit request.

Identity verification

Identity verification is the process a lender uses to confirm you are who you say you are before funding a personal loan. It may include matching your name, address, date of birth and Social Security number to records, reviewing a photo ID, or a short phone call. Accurate details speed this step up.

Installment loan

An installment loan is borrowed as one lump sum and repaid in fixed, scheduled payments over a set term. Personal loans, auto loans and many consolidation loans are installment loans. Once paid off, the account closes, unlike a credit card. Read installment versus revolving credit for a side-by-side comparison.

Interest

Interest is the price a lender charges for letting you use its money, calculated as a percentage of the balance you still owe. On an amortizing personal loan, interest is charged each month on the remaining principal, so paying early or paying extra reduces the total interest you pay.

Interest rate

The interest rate is the percentage a lender charges on the borrowed balance, not counting fees. The interest rate is usually lower than or equal to the APR, because the APR also includes required fees. When two personal loan offers show the same interest rate but different APRs, the higher APR has higher fees.

Late fee

A late fee is a charge added when a payment arrives after the due date or grace period. It may be a flat dollar amount or a percentage of the payment, within limits set by state law. The loan agreement lists the exact fee, so check it before signing any great meadow lending offer.

Loan agreement

A loan agreement is the legal contract between you and the lender that sets out the amount, APR, fees, payment schedule, late fees and your rights. Once you sign, you are bound by its terms. Read every page and ask the lender about anything unclear before you accept great meadow loans or any other offer.

Loan-matching service

A loan-matching service collects one request from a borrower and shares it with several lenders, which can then choose whether to make an offer. We work this way: we are not a lender and do not make credit decisions. A great meadow credit request is free, it reaches several great meadow lending partners at once, and you are never obliged to accept an offer.

Terms from M to P explain what you receive, what you repay and what you owe at any point, including net proceeds, origination fees, payoff amounts, prepayment penalties and principal. These words appear on almost every personal loan offer and statement, and on every great meadow credit request summary.

Minimum payment

A minimum payment is the smallest amount you must pay on a revolving account, such as a credit card, to keep it in good standing. Paying only the minimum stretches repayment over years and adds interest. Installment loans do not have a minimum payment; they have a fixed monthly payment.

Monthly payment

The monthly payment is the fixed amount due each month on an installment loan, covering interest and principal. As an estimate, $2,000 over 12 months at 24.99% APR works out to about $190.08 a month. Try other amounts and terms in the personal loan calculator.

Net proceeds

Net proceeds are the amount of money that actually reaches your account after any origination fee is subtracted. If you borrow $3,000 with a 4% fee, the net proceeds are $2,880, but you repay the full $3,000 plus interest. When you size a great meadow credit request, ask for enough to cover the bill after fees.

Origination fee

An origination fee is a one-time charge some lenders take for processing and funding a personal loan. Among lenders in our network it typically ranges from 0% to 8% of the loan amount and is usually deducted from the funds you receive. The fee is included in the APR, which is why APR is the better number for comparing offers.

Payoff amount

The payoff amount is the total you would need to pay today to close the loan completely. It includes the remaining principal plus interest accrued since your last payment, and sometimes small fees. Ask the personal loan lender for a payoff quote, which is usually valid for a set number of days.

Prepayment penalty

A prepayment penalty is a fee some lenders charge if you pay off a loan early or make large extra payments. Many personal loans have no prepayment penalty, which lets you save interest by paying ahead. Check the agreement for a prepayment clause before signing.

Prequalification

Prequalification is an early estimate of whether a lender might approve you and on what terms, usually based on a soft inquiry. Prequalification does not affect your credit score and is not a final approval. The rate and amount can change once the lender verifies your income and runs a full review.

Principal

Principal is the amount you borrow, or the part of it you still owe, not counting interest or fees. Each monthly payment on an installment loan reduces principal, and interest is charged on whatever principal remains. Extra payments usually go straight to principal, shortening the loan.

Terms from R to S separate the two main types of credit, revolving and installment, and the two main types of loans, secured and unsecured. They also explain the soft inquiry, the check that does not affect your score.

Refinancing

Refinancing means replacing an existing loan with a new one, usually to get a lower APR, a lower payment or a different term. A new personal loan may carry its own origination fee, so compare the total cost of the new loan with the remaining cost of the old one before switching.

Revolving credit

Revolving credit lets you borrow up to a credit limit, repay and borrow again without a fixed end date. Credit cards and lines of credit are the most common examples. Payments change with your balance, and interest rates are often variable, which differs from the fixed schedule of a personal loan.

Secured loan

A secured loan is backed by collateral, such as a vehicle title or a savings account, that the lender can claim if you do not repay. Because the lender takes less risk, secured loans can come with lower rates than great meadow loans that are unsecured. The tradeoff is that you could lose the asset if payments stop.

Simple interest

Simple interest is charged only on the outstanding principal, not on previously charged interest. Most personal loans use simple interest calculated daily or monthly. Paying on time or early reduces the principal faster, which lowers the interest charged in later months.

Soft inquiry

A soft inquiry is a credit check that does not affect your credit score. Lenders may use one to review a request and show a possible offer, and you can see soft inquiries on your own report, but other lenders cannot. Sending a great meadow credit request that lenders review with a soft inquiry lets you compare before any hard inquiry.

Terms from T to Z cover how long you repay, the full cost of borrowing, the disclosures lenders must provide and the review that decides your offer. The term is the single biggest driver of total interest on any offer that follows a great meadow credit request.

Term

The term is the length of time you have to repay a loan, usually stated in months. Lenders in our network typically offer terms of 6 to 36 months. A longer term lowers each payment but adds interest: $2,000 at 24.99% APR costs about $280.94 in interest over 12 months and about $862.33 over 36 months (est.). The guide to APR ranges shows more comparisons.

Total cost of the loan

The total cost of a loan is everything you repay over the full term, including principal, interest and fees. Comparing total cost, not just the monthly payment, shows which personal loan offer is truly cheaper. In the representative example, $2,000 over 12 months at 24.99% APR totals about $2,280.94 (est.).

Truth in Lending disclosure

A Truth in Lending disclosure is a standardized summary a lender must give you before you sign, listing the APR, finance charge, amount financed and total of payments. Federal law requires it so borrowers can compare great meadow credit results and other offers on equal terms. Look for it in every personal loan offer you receive.

Underwriting

Underwriting is the lender's review of your application to decide whether to lend and on what terms. Personal loan underwriters look at your credit report, income, debts and identity details. Great meadow lending requests are underwritten by each lender separately, so one lender may say yes when another says no.

Unsecured loan

An unsecured loan is not backed by collateral, so the lender relies on your credit history and income instead. Most personal loans from $500 to $5,000 are unsecured. Rates are often higher than for secured loans because the lender carries more risk.

Variable rate

A variable rate is an interest rate that can rise or fall over the life of a loan, usually tied to a benchmark index. Payments can change as the rate moves, which makes budgeting harder. In the great meadow lending network, most offers you see will list a fixed rate. Credit cards often carry variable rates, while most personal loans use fixed rates.