Loan terminology refers to some words used during loan application. This means that when applying for loan you’ll come across these terms. While you might have come across or used these words very often, you might be surprise what they actually means in relation to loan.
Please note that we can’t possibly list all the terms. But we’ll try to list as many as possible.This list will include the popular loan terminology and also the ones that are not popular. Ready? lets get started
Basic Loan Terminology
Below are some of the basic loan terms and what they means during loan application
1. Loan:
This generally refers to anything that you borrow or take to be paid back or return on a later date with interest. Loan involves three parties; The borrower, the Lender and the Witness.
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2. Types Of Loan:
This refers to the various types of loan available. You have lots of options when it comes to applying for a loan.
- Mortgage: This is a type of loan that is collected or purchased to buy a house or property. Sometimes business men/women also use their house as security to secure a loan. Usually when you get a mortgage loan your property is used as security.This means that your house can be sold to make payment if you default.
- Auto Loan: Any loan option that allows you to buy a personal car, business car or auto mobile is refer to as Auto Loan.
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- Refinancing: A loan term that is related to acquiring a loan while there is still an outstanding loan. It usually allows borrowers the option to get another loan while still paying for the first loan. There are terms and conditions attached with Refinancing and it varies from one loan institution to another.
- Bank Overdraft: Bank overdraft can also be refer to as soft loan. It simply means that your bank credit your bank account balance with some money to be deducted on a later date. This is perhaps the simplest loan option as its terms and conditions are relatively favorable.
- Other Loan options includes
- Business Loans for business men and women.
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- Personal Loan for personal use and emergency situations.
- Student Loans for student who which to study in the higher institutions.
- Salary Advance loan that makes it possible for workers to get a loan pending when they receive their salary.
3. Loan Security(Collateral):
Loan security also know as collateral in some places refers to what you can use as a guarantee . Failure to meet up with the loan payment on deadline date will result to the bank owning your property. Anything can be used as loan security, House, Cars, Truck etc.
4. Quotes:
Quotes refers to the expected proposal of the loan. It shows how your loan will look like after a specified period of time.
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5. Loan Calculator:
These are calculators designed to help you better understand your loan options. It allows you to input your loan amount, see the interest rate, select payment duration and shows you your monthly return and final return.It also calculates the total amount payable at the end of the loan duration. CLICK HERE to try the Mntrends loan calculator.
6.Interest Rate:
Interest rate refers to how much the bank or loan institute will be charging you for the duration of the loan.
7. Bi-Monthly Mortgage or Loan:
A loan repayment plan that allows borrowers to pay the schedule monthly payment twice a month.
8. Bi-Weekly Mortgage or Loan:
This repayment plan allows borrowers to make a payback every two weeks.
9. Debt Consolidation:
Debt consolidation refers to taking anew loan to pay off old loans or debt. this type of loan helps you to clear off old debts.It usually attracts low interest rate, low monthly payback payment.
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10. Closed Mortgage:
A type of mortgage that could not be paid fully before its expiry duration or term.
11. Guarantor:
Guarantor is anyone who stands for anyone taking a loan. In some cases these persons are held responsible when the borrower can not be found. So be sure to trust someone before you stand as a guarantor.
12. Co-Applicant:
Sometimes you need help boosting your credit score, Co-Applicant might just be what you need. Co-Applicant is having a second person with you apply for loan. From report this significantly increase your chances of getting the loan.
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13. Loan Policy and Terms & Conditions:
These refers to the Dos and Don’t associated with the loan option. You must be sure to understand the policy guiding the loan. And also meed the terms and conditions of the loan institution for the duration of the loan.
These differs from one loan institution to another so be sure to fully understand them before you accept the loan from the bank or any loan institution.
As stated from the onset, we can’t possible list all the loan terminology.But these are the basic terminology associated with loan. We hope you have come to understand some few terms in the world of loan.
