The Essential List Of Payday Loan Terms Every Borrower Should Know
If you’re considering a payday loan as a short-term financial solution to tough times, you’ll need to know these top payday loan terms before deciding if one is right for you. You’ll likely see these words in your chosen lender’s fine print, so it’s important to know what you’re agreeing to before you choose to sign on the dotted line.
Before diving in, know the definition of payday loan: a short-term loan usually for less than $500 generally paid back on your next payday. This definition may change depending on your lender of choice, but the principal terms to know will remain the same. Let’s dive in.
Top Payday Terms to Know
Here are the 26 payday loan terms you’ll likely run into when investigating and applying for a payday loan.
The Automated Clearing House (ACH) is an authorized electronic payment system. Whenever you give a lender or company permission to take money out of your bank account – like when you set up automatic bill pay – this is done through the ACH.
APR vs. APY
APR is the interest you pay on loans and other credit lines, whereas APY is the interest that’s paid to you when you keep your money in things like high-yield savings accounts.
Cash Advance Loan
This is another name for a payday loan.
Check Advance Loan
This is another name for a payday loan.
Collateral is any asset you offer as a promise to repay a loan. If you stop making the predetermined payments on the loan, the lender has a right to claim your collateral. Our payday loans do not require any collateral.
If the borrower stops repaying their loan, the account is usually sent to a collections department or company that is in charge of collecting the amount owed.
Credit can refer to your ability to obtain goods and pay for them in the future – such as with credit cards – or it can refer to your credit score, which is a number used to describe your ability to repay debt. Traditional lenders require a high credit score to qualify for a loan, but payday loans from Utah Title Loans, Inc. do not share this requirement.
When you stop paying back a loan, you default on it.
If you write a check with a future date, it cannot be deposited until the said date. It is a deferred deposit.
Direct Payday Lender vs. Indirect Payday Lender
A direct lender can provide a payday loan directly to the borrower, such as here at Utah Title Loans, Inc.
Indirect lenders are middlemen who direct the borrower to direct lender options.
When a bank account does not have enough money to cover a check, transfer, withdrawal, or bill pay, it has insufficient funds.
Loan fees are any fees the direct lender charges apart from the interest.
Long-Term Payday Loan Installments
Certain lenders allow for these longer payday loans which are paid off in installments.
The maturity date is the date the last payment of a loan is due. Payday loan maturity dates are usually at the end of your next pay period.
Maximum Loan Amount
Lenders decide how much money you qualify for, which means your maximum loan amount for one of our payday loans could be anywhere from $100 to $500. This depends on your application and needs.
Moneylenders are anyone who lends money and charges interest. This could be a bank, legal entity, or person.
Most payday loans charge a small fee that is paid upfront or added to the total loan amount.
The principal is the initial amount you borrow. Our maximum principal is $500.
Proof of Income
Proof of income is one of our payday loan terms, as well as a term you will see on applications for government assistance, insurance, scholarships, and any other loan. You’ll need to show how much you make through official pay stubs, bank statements, work contracts, or official company/government forms.
Secured Loan vs. Unsecured Loan
Secured loans required collateral whereas unsecured loans, like our payday loans, do not.
Short-term loans are usually paid back within a few weeks or months.
Simple Interest vs. Compound Interest
Simple interest is only gained from the principal loan, whereas compound interest is charged on the loan plus any accumulated past interest.
Verification Of Employment
You can verify your employment through an employment verification letter from your company’s human resources department.
How To Get Your Payday Loan
Knowing these payday loan terms will help to speed up your request and approval process. If you’re ready to get started, head to our homepage and fill out the inquiry form to begin.
The rest of the payday loan process will happen over the phone, followed by a short meeting at one of our Utah Title Loans, Inc. offices near you. You’ll need your I.D., most recent pay stub, and a blank check in your name to complete the process.
Now that you know the essential payday loan terms and the definition of payday loans, you are ready to apply for your own payday loan to take care of that looming bill before your next payday. We value your time, and our loan process can take less than half an hour.
Could you benefit from a few extra bucks to address life's challenges over the next couple of weeks? If so, submit our online form to find out quickly if you qualify for a Utah Title Loans, Inc. payday loan. Your emergency cash is ready and waiting for you today!
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.