Lendgo Loans Glossary of Personal Loan Terms

Use the glossary as a side reference while you read an offer: look up any unfamiliar word, check how it affects your monthly payment or total cost, then return to the offer with a clearer picture of what you are agreeing to.

Three terms do most of the work when you compare lendgo loans offers: APR, total cost of borrowing and net funding amount. If you only have a minute, read those first. When a definition mentions a payment or rate, the figure is an estimate for illustration; your real numbers depend on the lender, your credit and your state. For current ranges and worked payment tables, see our personal loan rates and costs guide.

Terms from A to C cover the core math and paperwork of borrowing: how APR and amortization work, what discounts and co-signers do, and how credit reports, scores and utilization shape the offers lenders make.

Adverse action notice

A written notice a lender must send when it declines your credit request, or offers worse terms, based partly on information in your credit report. It lists the main reasons and names the credit bureau that supplied the report. You can then request a free copy of that report within 60 days and dispute any errors.

Amortization

The schedule that spreads a loan's principal and interest across equal monthly payments. Early payments go mostly toward interest; later payments go mostly toward principal. On a 12-month personal loan the shift is gradual, but on a 36-month loan you will notice that the balance falls slowly at first.

APR (annual percentage rate)

The yearly cost of a loan expressed as a percentage, including the interest rate and certain fees such as an origination fee. Because APR folds those costs together, it is the best single number for comparing two offers of the same amount and term. Typical personal loan APRs run from about 6% to 35.99%, depending on the lender and your credit.

Autopay discount

A small rate reduction, often around 0.25 to 0.50 percentage points, that some lenders give when you set up automatic monthly payments from your bank account. The discount is usually lost if you cancel autopay. Make sure your account can cover each draft so the savings are not wiped out by a returned-payment fee.

Balance transfer

Moving debt from one credit card to another, usually to take advantage of a low or zero introductory rate. Most cards charge a balance-transfer fee of a few percent of the amount moved. The low rate lasts only for a set period, after which the regular card APR applies to whatever remains.

Charge-off

An accounting step a lender takes when it decides a debt is unlikely to be repaid, typically after several months of missed payments. A charge-off does not erase what you owe; the debt may be sold to a collection agency. It stays on your credit report for up to seven years and weighs heavily on your score.

Co-signer

A second person who signs a loan and agrees to repay it if the main borrower does not. A co-signer with steady income and strong credit can improve approval odds or lower the APR. That person's credit is on the line too, and missed payments appear on both reports.

Collateral

An asset you pledge to secure a loan, such as a vehicle, savings account or certificate of deposit. If you default, the lender can take the collateral to recover its money. Most small personal loans are unsecured and need no collateral at all.

Credit report

A record kept by a credit bureau of your borrowing history: open and closed accounts, balances, payment history, collections and public records such as bankruptcies. Lenders read it to judge risk. You can get free copies from each of the three major bureaus and should check them for errors before requesting credit.

Credit score

A three-digit number calculated from your credit report that estimates how likely you are to repay debt on time. Payment history and amounts owed carry the most weight. Different lenders use different scoring models, so the number you see in an app may not match the one a lender pulls.

Credit union

A member-owned, not-for-profit financial cooperative that offers checking, savings and loans. Federal credit unions are limited by law to an 18% APR cap on most loans, which can make them a lower-cost option for members. You usually need to join, often based on where you live, work or worship, before you can borrow.

Credit utilization

The share of your available revolving credit that you are using, shown as a percentage. If you owe $1,500 on cards with a combined $5,000 limit, your utilization is 30%. Lower utilization generally helps your score, and paying cards down before a personal loan request can nudge your offers in the right direction.

Terms from D to F explain debt-to-income math, what default means in practice, how lenders pay creditors directly and how rates, scores and funding time are defined on an offer.

Debt consolidation

Combining several debts, often high-APR credit card balances, into one new loan with a single fixed monthly payment. Consolidation saves money only if the new APR and fees are lower than what you pay now. It is not the same as debt settlement, which involves negotiating to pay less than you owe.

Debt-to-income ratio

Your total monthly debt payments divided by your gross monthly income, shown as a percentage. Someone paying $1,600 a month on debts with $4,000 of monthly income has a DTI of 40%. Many lenders prefer a ratio below about 36% to 40%; our eligibility guide walks through a full example.

Default

Failing to repay a loan as the contract requires, usually after a set number of missed payments. Default can lead to collection activity, damage to your credit report and, on a secured loan, loss of collateral. Contacting your lender early about a hardship plan can often prevent it.

Direct pay

An option, common on debt consolidation loans, where the lender sends loan funds straight to your creditors instead of to your bank account. Direct pay removes the temptation to spend the money elsewhere. Some lenders offer a small rate discount for choosing it.

FICO score

The most widely used credit scoring model, ranging from 300 to 850. Scores of 580 to 669 are generally considered fair, 670 to 739 good, and 740 or higher very good. Many personal loan lenders use some version of a FICO score, alongside income and DTI, to set your APR.

Fixed rate

An interest rate that stays the same for the entire loan term, so your monthly payment never changes. Most personal loans carry fixed rates. A fixed rate makes budgeting easier: a $2,000 loan at 24.99% APR for 12 months stays at about $190.08 a month from first payment to last.

Funding time

How long it takes for money to reach your bank account after a lender approves you and you sign the agreement. Funding is often the next business day, sometimes the same day, but it depends on the lender, your bank and when you finish verification. Weekends and bank holidays can add a day or two.

Terms from G to I describe the grace periods, hardship options and credit inquiries you may encounter, plus the identity and income checks that come before a lender funds an installment loan.

Grace period

A short window after a payment due date during which you can pay without a late fee, often around 10 to 15 days. Not every lender offers one, and the length is set in your loan agreement. Interest may still accrue during the grace period even when no fee applies.

Hard inquiry

A credit check that happens when you formally apply for credit and the lender pulls your full report. A hard inquiry is visible to other lenders and can lower your score by a few points, usually for a few months. It typically happens when you accept an offer, not when you prequalify.

Hardship plan

A temporary arrangement a lender may offer if you lose income or face a crisis, such as a reduced payment, a short pause or a changed due date. Terms vary widely, and interest may continue to build. Ask before you miss a payment; options shrink once an account is delinquent.

Identity verification

The steps a lender takes to confirm you are who you say you are, often by matching your name, address, date of birth and Social Security number to records, and sometimes by asking for a photo ID or selfie. Verification protects you from fraud. A credit freeze must be lifted temporarily for it to work.

Income verification

The process of confirming the income you reported, using pay stubs, bank statements, tax returns, benefit letters or a secure bank-account link. Lenders use it to make sure the payment fits your budget. Having documents ready can shorten funding time noticeably.

Installment loan

A loan repaid in a fixed number of scheduled payments, usually monthly, until the balance reaches zero. Personal loans, auto loans and student loans are all installment loans. Unlike a credit card, the account closes when the final payment is made.

Interest rate

The percentage a lender charges for borrowing money, applied to your outstanding principal. The interest rate does not include fees, so it is usually lower than the APR on the same loan. When two offers show different fees, compare APR rather than the interest rate alone.

Terms from J to O define the costs and timelines printed on a loan agreement, including late fees, loan terms and origination fees, along with the lender networks and military protections that affect who can offer you credit.

Late fee

A charge added when a payment arrives after the due date and any grace period. Late fees may be a flat amount or a percentage of the payment, and many states limit how much lenders can charge. A payment that is 30 days or more late can also be reported to the credit bureaus.

Lender network

A group of independent lenders that receive requests through one shared form. A connector service like ours is not a lender; lenders in our network review each request, decide whether to make an offer, set the terms and fund approved loans. Shoppers comparing lendgo personal loans use a network to see several offers without filling out several applications.

Loan agreement

The legal contract you sign before funding, which states the amount, APR, payment schedule, fees and your rights. Read it fully, including sections on late fees, prepayment and dispute resolution. If anything differs from the offer you accepted, ask before signing.

Loan term

The length of time you have to repay a loan, usually stated in months. For loans between $500 and $5,000, terms of about 3 to 36 months are typical. A longer term lowers the monthly payment but increases total interest: $2,000 at 24.99% APR runs about $190.08 a month over 12 months or about $106.73 over 24 months.

Military Lending Act

A federal law that protects active-duty servicemembers and their covered dependents. Among other rules, it caps the all-in military APR at 36% on most consumer loans and bans certain contract terms, such as mandatory arbitration. Lenders must check whether a borrower is covered before making a loan.

Net funding amount

The money that actually lands in your account after any origination fee is deducted from the loan. On a $2,000 loan with a 5% fee, the net funding amount would be $1,900, while you repay the full $2,000 plus interest. If you need a specific sum in hand, request enough to cover the fee.

Origination fee

A one-time charge for processing a loan, and one of the first lines to check on lendgo loans offers, commonly between 0% and about 10% of the amount borrowed. Most lenders deduct it from your funds rather than billing it separately. Because it is included in the APR, an offer with a low interest rate and a high origination fee can cost more than it first appears.

Terms from P to R cover payment dates, early-payoff rules, prequalification, principal and refinancing, plus the representative example lenders use to show what a typical loan costs.

Payment due date

The day each month your payment must reach the lender. Many lenders let you pick or change your due date to line up with when your paycheck or benefit deposit arrives. Setting the date a few days after income lands lowers the chance of a returned payment.

Prepayment penalty

A fee some lenders charge if you pay off a loan early, meant to recover interest they would have earned. Most personal loan lenders do not charge one, but check the loan agreement before signing. Paying early on a loan without a penalty reduces the total interest you pay.

Prequalification

A preliminary look at the offers you might receive, based on a soft credit inquiry and the information you provide. Prequalification does not affect your score and is not final approval. Final terms can change after the lender verifies your income and identity.

Principal

The amount you borrow, before interest and fees. Each monthly payment covers that month's interest first and then reduces the principal. On a $1,000 loan, the principal is $1,000 even if an origination fee means you receive less.

Refinance

Replacing an existing loan with a new one, usually to get a lower APR, a smaller monthly payment or a different term. You might refinance a personal loan after your credit improves, or replace a high-cost installment loan with a cheaper one. Check for fees on the new loan and any prepayment penalty on the old one.

Representative example

A sample loan, often the first number people see when researching lendgo loans, used in advertising and disclosures to show what borrowing typically costs. Our representative example: $2,000 borrowed for 12 months at 24.99% APR is about $190.08 a month, $2,280.94 total and $280.94 in interest. It is an estimate; you can try other amounts on our personal loan calculator.

Terms from S to Z explain secured and unsecured loans, soft credit checks, state licensing, underwriting, federal disclosure rules and the true total cost of borrowing, along with how variable rates differ from fixed ones.

Secured loan

A loan backed by collateral, such as a car title or a savings account. Because the lender can take the asset if you default, secured loans may come with lower APRs or easier approval. The trade-off is real risk to something you own.

Soft inquiry

A credit check that does not affect your score and is not visible to other lenders. Soft inquiries happen when you check your own credit, when lenders send prescreened offers and when you prequalify. Checking lendgo rates through a prequalification step typically involves only a soft inquiry.

State-licensed lender

A lender that holds a license from a state's financial regulator to make consumer loans to residents of that state. State licenses come with rules on maximum rates, fees, loan sizes and collection practices. You can usually confirm a lender's license on your state regulator's website before you sign.

Total cost of borrowing

Everything you repay over the life of a loan, minus the amount you received, including interest and fees. It is the clearest way to see what a loan really costs. In our representative example, $2,000 over 12 months at 24.99% APR has a total cost of about $280.94.

Truth in Lending Act

A federal consumer-protection law that requires lenders to disclose key terms in a standard format before you sign, including the APR, finance charge, amount financed and total of payments. The disclosure lets you compare offers on equal footing. The CFPB, the federal consumer-finance regulator, writes many of the rules that put the act into practice.

Underwriting

The lender's process of reviewing your credit, income, debts and identity to decide whether to approve a loan and at what APR. Automated underwriting can take minutes; manual review may take a day or more. Answering document requests quickly keeps underwriting moving.

Unsecured loan

A loan that requires no collateral and is approved based on your credit, income and debts. Most personal loans between $500 and $5,000 are unsecured. Without an asset backing the loan, the APR may be higher than on a comparable secured loan.

Variable rate

An interest rate that can rise or fall over the loan term because it is tied to a benchmark index. Payments on a variable-rate loan can change from month to month. Variable rates are rare on personal loans, so if an offer has one, ask how high the rate could go.

Comparing offers well means reading three lines side by side: APR, net funding amount and total cost of borrowing. Those figures, together with the loan term, show what you receive, what you repay and how long the payments last.

Suppose two offers arrive for a $2,000 personal loan over 12 months. Offer A has a 22.99% interest rate and a 6% origination fee. Offer B has a 24.99% interest rate and no fee. Offer A looks cheaper at first glance, but you would receive only about $1,880 and repay interest on the full $2,000, so its APR ends up higher. Offer B puts the whole $2,000 in your account and costs about $280.94 in interest. People looking up lendgo rates often focus on the interest rate alone; the APR and net funding amount tell the fuller story.

A short routine works for most borrowers:

1. Write down the APR, monthly payment, term and net funding amount for each offer.
2. Multiply the monthly payment by the number of months to get the total repaid.
3. Subtract the net funding amount to see the true total cost of borrowing.
4. Check the loan agreement for a prepayment penalty, late fee and grace period.
5. Confirm the lender is licensed in your state.

If you want to see how lenders stack up on fees, funding time and credit ranges before you request lendgo loans, our side-by-side lender comparison lays out the differences. Readers who start with a lendgo search and finish here with these definitions are well placed to choose the personal loan with the lowest real cost.