A to H
Auto title loan. A short-term loan secured that uses your car as collateral, usually up to 50% of your car’s value. You hand the car title either to your lender or a third party. If you aren’t able to repay it, your lender gets your car.
Balloon payment. A large payment at the end of a loan, common on short-term loans with interest-only repayments.
Bounced check. A check that was written for more than the amount available in the account it’s associated with.
Cash or check advance loan. A type of payday loan that requires you to repay it in full once you receive your next paycheck.
Check fraud. When someone writes a check they know is going to bounce. Payday lenders can sue you for fraud if you provide them with a postdated check that bounces.
Deferred deposit. Also, post-dated check. A check that’s dated sometime in the future, usually when your loan is due.
Collection agency. A company hired by lenders to get borrowers to pay what they owe on an unsecured loan that they are either delinquent on or have defaulted on.
Credit check. When a lender reviews your credit score and history to evaluate your track record on repaying debts. Many payday lenders don’t run a credit check.
Default. When a borrower misses several loan repayments or has given up on attempting to repay a loan.
Electronic transfer. When funds are moved directly from one bank account to another. Also referred to as an ACH transfer.
Finance charge. A fixed fee that you pay in exchange for being able to borrow a payday loan.
I to P
Loan fees. Charges added to your loan on top of interest, including application fees, origination fees and money transfer fees. Your loan’s APR is an expression of your loan’s interest and fees in a percentage.
Loan shark. An illegal lender who typically charges high interest rates.
Maturity date. Also, due date. The day you’re required to completely repay your loan, in addition to interest and fees.
Military consumer protection. Active members of the military and veterans have additional consumer protections when it comes to payday loans. Laws vary by state and can include caps on payday loan APRs, maximum loan amounts and restrictions on borrowing before deployment.
Post-dated check. A check with a date written sometime in the future, sometimes used as collateral for a payday loan.
Q to Z
Risk-based pricing. When a lender adjusts (usually raises) the interest, fees or loan amount because a borrower is seen as likely to have trouble repaying a loan.
Sent to collections. When a lender transfers a loan with overdue payments to a collection agency to recover the amount owed.
Subprime lender. A lender willing to work with borrowers that have poor credit, typically charging high interest and fees.
Unsecured loan. A loan that isn’t backed by collateral, meaning that the creditors can’t come after your house, car or any valuables if you can’t repay your loan.
Usury laws. Local laws that cap the APR on certain loans.
Wage garnishment. When a lender is allowed to take money directly from a borrower’s paycheck after a court order. Typically after a borrower is sued by a lender for defaulting on an unsecured loan.