CLEARBORROW · GUIDE · PUBLISHED NOVEMBER 12, 2026

Loan terms glossary

By Petrov Andriy, founder and editor · AI-assisted desk research

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Short, plain-English definitions of the terms you will see in loan offers, credit reports and collection letters, each linked to a full ClearBorrow guide or calculator. The two to understand first: APR, which includes fees and is the best single number for comparing loans, and the origination fee, which often comes out of the money you receive.

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Terms A to Z
Calculators
Questions
Sources and limits

Terms A to Z

APR (annual percentage rate): The yearly cost of credit including interest and certain fees such as an origination fee. More about APR →
Interest rate: The yearly rate charged on the balance, without fees. More about Interest rate →
Origination fee: A one-time fee to set up the loan, often deducted from the money you receive. More about Origination fee →
Principal: The amount borrowed, or the part of the balance that is not interest. More about Principal →
Term: How long you have to repay, usually in months. More about Term →
Installment loan: A loan repaid in regular equal payments over a set term. More about Installment loan →
Payday loan: A small, short-term loan usually due in one payment on your next payday. More about Payday loan →
Rollover / renewal: Paying a fee to extend a payday loan instead of repaying it; fees pile up. More about Rollover →
Cash advance app: An app that advances part of your pay, often with express fees, tips or memberships. More about Cash advance app →
Secured loan: A loan backed by collateral, such as a car or savings. More about Secured loan →
Title loan: A loan secured by your car title; you can lose the car if you do not repay. More about Title loan →
Credit builder loan: A loan held in savings while you pay, to build a payment record. More about Credit builder loan →
Debt-to-income ratio (DTI): Monthly debt payments divided by gross monthly income. More about Debt-to-income ratio →
Credit report: The record of your accounts and payments kept by Equifax, Experian and TransUnion. More about Credit report →
Credit utilization: How much of your card limits you are using. More about Credit utilization →
Hard inquiry / soft inquiry: A hard inquiry follows a credit application; a soft check (like a rate check) does not affect your score. More about Hard inquiry →
Prepayment penalty: A fee for paying off a loan early; many personal loans have none. More about Prepayment penalty →
Matching service: A website that passes your request to lenders; it does not lend itself. More about Matching service →
Time-barred debt: A debt past the state’s deadline to sue. More about Time-barred debt →
Validation notice: The written details a debt collector must give you about a debt. More about Validation notice →
Debt settlement: Paying less than the full balance by agreement, usually with credit damage. More about Debt settlement →
Advance-fee scam: A fake lender demanding a fee before releasing a loan that never comes. More about Advance-fee scam →

Calculators

Questions

What is the difference between APR and interest rate?

APR includes certain fees; the interest rate does not. Compare loans by APR.

Is a “finance charge” the same as interest?

It is the total dollar cost of credit in your disclosure, which can include interest and fees.

Sources and limits

Sources checked November 12, 2026. Calculators give estimates, not offers; lenders calculate exact payments, APRs and approval. This is general information, not financial or legal advice. How we use sources.