Glossary

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A

Amortization Schedule

A table outlining loan payments, showing interest, principal, and remaining balance over the term of loan.

Annual Interest Statement

A summary document that shows the total interest paid or earned on a financial account over the course of a year, which is often issued by banks, lenders, or financial institutions and is used for tax filing.

Annual Tax Statement

A summary document provided by employers, financial institutions, or other organizations, detailing the income earned and taxes paid during a specific year, which is used for filing taxes.

Application Programming Interface

The difference between the interest rate a lender charges on a loan and the cost of funds, indicating the lender’s profit margin.

Auto Loan Promissory Note

A written agreement between a borrower and lender specifying repayment terms for a car loan, including interest and default clauses.

Auto Loans

Loans borrowed by pledging borrower's vehicle, typically with fixed monthly payments.

Automated Decisioning

The use of technology, algorithms and data to make decisions without human intervention.

B

Balloon Payment

A large final loan payment due at the end of a loan term after smaller periodic payments.

Base Rate Loan / Loan Base Rate

A loan tied to a benchmark interest rate set by financial institutions.

Borrower Profile

A summary of a borrower's financial background, including credit score, income, and debt-to-income ratio, used for loan evaluation.

Business Loan

A loan designed to fund business operations.

C

Calculation of APR

The method of determining the total cost of a loan, including interest and fees.

Charged Off Status

A loan status indicating it is unlikely to be repaid and has been written off or marked as NPA.

CLTV (Combined Loan-to-Value Ratio)

A financial metric that compares the total outstanding loans on a property to its appraised value. It helps lenders assess the risk of lending when multiple loans are secured against the same asset.

Cloud-Based Lending

Loan management systems hosted on the cloud for scalability and accessibility.

Co-Borrower

A person who shares equal responsibility for repaying a loan and whose income and credit profile are considered during underwriting.

Compound Interest

The interest applied on the principal and on the interest that was already applied.

Consumer Financial Protection Bureau (CFPB)

A government agency created to protect consumers in the financial marketplace and ensure they are treated fairly by financial institutions.

Credit Bureau

A company that collects, stores, and manages credit information about individuals and businesses.

Credit Limit

The maximum amount a borrower can draw from a credit account.

Credit Risk

The likelihood of a borrower defaulting on a loan.

Credit Scoring

The process of arriving at a numerical value that reflects how likely the customer is to repay borrowed money based on their credit history.

CRM (Customer Relationship Management)

The software tools / platforms used by businesses to manage their interactions with current and potential customers.

Customer Self-Service Portal

An online platform where borrowers can access loan details, make payments, upload documents, and manage their accounts without direct lender assistance.

D

Dashboard Mobile App

A native or web-based mobile application designed to provide lenders and users with real-time KPIs.

Data Analytics

The process of analyzing borrower data to optimize lending decisions.

Data Encryption

A process of converting plain text or data into a coded format that can only be read or decoded with the correct decryption key. It is a fundamental security measure used to protect sensitive information.

Debt Collection

The process of recovering long time unpaid loans from borrowers by lenders or agencies.

Debt Collection Agency

A company / an agency specializing in recovering long time past-due loans on behalf of lenders.

Debt Consolidation

The process of combining multiple debts into a single loan or payment with the goal of simplifying your payments and potentially reducing interest rates.

Debt Service Coverage Ratio (DSCR)

A financial metric that compares a borrower’s available income to their total debt obligations, used to assess loan repayment ability.

Debt-to-Income Ratio

A financial metric that compares the customers' monthly debt payments to their gross monthly income, which helps lenders assess their ability to manage payments and repay borrowed money.

Delinquency

The state of missing loan payments beyond the due date..

Delinquency management

The process of tracking and handling overdue loan payments to minimize defaults and recover outstanding debts.

Default loan

A loan in which the borrower has failed to meet repayment obligations.

Document Management System (DMS)

A software solution that helps organizations store, organize, track, and manage documents in a digital format making it easier to find, share, and secure important files.

Due Date

The specific date by which a financial obligation must be paid. i.e. the next installment date

E

E-Signature Integration

A feature that allows borrowers to electronically sign loan documents securely and legally. It streamlines the loan approval process by eliminating the need for physical paperwork.

F

Fair Lending Compliance

A set of laws, regulations, and policies designed to ensure that all individuals are treated fairly and equally, without any discrimination, when applying for loans or credit.

FMV in Finance

The estimated price an asset would sell for in an open and competitive market under normal conditions.

Foreclosure of Loan

The legal process where a lender seizes collateral due to loan non-payment.

G

Grace Period

A set amount of time after a payment is due during which no late fees or penalties are charged, and the account is still considered in good standing.

I

Installment Loans

A loan repaid in fixed monthly payments over a set period.

Interest

The cost of borrowing money, usually expressed as a percentage.

Interest Accrual Formula

A formula used to calculate the amount of interest accumulating on a loan over time.

Interest Rate

The cost of borrowing expressed in a percentage

L

Late Fee Waiver

A lender's decision to remove or not charge a penalty for a delayed loan payment under specific conditions.

Late Payment Fee

A charge imposed for failing to make a loan payment on time.

late payment notice

A formal reminder that a loan payment is overdue..

Lender Dashboard

A formal reminder that a loan payment is overdue..

Loan

A sum of money borrowed and repaid over time with interest.

Loan Approval

The process by which a lender evaluates and agrees to lend money to a borrower based on their ability and likelihood to repay the loan.

Loan Application

A loan request form completed by the borrower, providing key personal, income, and employment information required by the lender.

Loan Collections

The process of recovering overdue loan payments.

Loan Note

A formal document outlining the loan terms, including principal, interest rate, repayment schedule, and borrower obligations.

Loan Origination Fee

A one-time fee charged by lenders to cover the cost of processing a new loan application..

Loan Portfolio

A collection of loans held by a financial institution.

Loan Renewal

The process of extending or re-establishing a loan agreement after the original loan term ends often with new terms.

Loan repayment terms

The conditions agreed upon by the lender and borrower, including payment schedule, interest rate, and loan duration.

Loan Settlement

The process of paying off a loan either in full or through an agreement to reduce the outstanding balance.

Loan Subordination Agreement

A legal document that ranks one loan below another in priority for debt repayment, affecting which lender gets paid first in case of default.

Loan-to-Value Ratio

A measure used by lenders to compare the size of a loan to the value of the asset being purchased or used as collateral.

Loan tracker

A tool used to monitor loan payments and outstanding balances.

M

Mobile Lending Application

A smartphone app that enables borrowers to apply for loans, track payments, and manage accounts on the go.

Multi-Currency Support

A feature in lending platforms that allows transactions and loan management in multiple currencies.

N

Non-Performing Loan (NPL)

A loan that has not received scheduled payments for an extended period, typically 90 days or more, and is considered at risk of default.

NPA

Non Performing Asset, which refers to loan that is not getting repaid

O

Outstanding Amount

The remaining balance of a loan that has not yet been paid. It is the total sum of money that a borrower still owes to the lender, including the principal, interest, and any additional fees or charges.

P

Payment Gateway Integration

A system enabling secure online loan payments.

Payment Plan

An agreed-upon schedule for repaying a loan, outlining installment amounts, frequency, and duration.

Payday Loans

An agreed-upon schedule for repaying a loan, outlining installment amounts, frequency, and duration.

Per Diem Interest

An agreed-upon schedule for repaying a loan, outlining installment amounts, frequency, and duration.

Personal Loan

An agreed-upon schedule for repaying a loan, outlining installment amounts, frequency, and duration.

Portfolio Metrics

An agreed-upon schedule for repaying a loan, outlining installment amounts, frequency, and duration.

Prepayment Loan

An agreed-upon schedule for repaying a loan, outlining installment amounts, frequency, and duration.

Prequalification

An agreed-upon schedule for repaying a loan, outlining installment amounts, frequency, and duration.

Principal Amount

An agreed-upon schedule for repaying a loan, outlining installment amounts, frequency, and duration.

Principal Balance

An agreed-upon schedule for repaying a loan, outlining installment amounts, frequency, and duration.

Processing Fee

An agreed-upon schedule for repaying a loan, outlining installment amounts, frequency, and duration.

Progressive Web App (PWA)

An agreed-upon schedule for repaying a loan, outlining installment amounts, frequency, and duration.

Promissory Note

A legal document in which a borrower formally promises to repay a specific loan amount under agreed-upon terms..

R

Real-Time Reporting

A system that provides instant access to up-to-date loan data, helping lenders track payments, delinquencies, and financial metrics in real time.

Refinancing

The process of replacing an existing loan with a new one, usually to get better terms like a lower interest rate, different loan length, or smaller monthly payments.

Revolving Loan / Line of Credit

A preliminary step in the loan process that estimates how much a customer may qualify to borrow.

Role-Based Access Control (RBAC)

A security framework that restricts system access based on user roles, ensuring only authorized personnel can view or modify specific loan data.

S

Secured Loan

A loan backed by collateral, such as a house or car.

Simple Interest

The interest applied on the principal.

simple promise to pay agreement

A basic legal document in which a borrower agrees to repay a loan under specified terms. It includes the loan amount, due date, and repayment conditions.

Single Payment Loan

A loan repaid in one lump sum payment.

Student Loan

A loan designed to help pay for education-related expenses.

Subprime Borrower

A borrower with a low credit score or high credit risk, often charged higher interest rates.

T

Third-Party Integrations

The ability to connect loan management software with external services like payment gateways, credit bureaus, and accounting tools for seamless operations.

Truth in Lending Act (TILA)

A federal law designed to promote disclosure of accurate terms and conditions of credit and lending to protect consumers from unfair practices.

U

Underwriting

The process of assessing a borrower’s risk before approving a loan.

Unsecured Loan

A loan granted based on creditworthiness, without requiring collateral.

Unsecured promissory note

A loan agreement where repayment is based solely on the borrower’s promise, without requiring collateral.

W

Workflow Automation

The use of technology to streamline lending processes.

Y

Yield Spread

The difference between the interest rate a lender charges on a loan and the cost of funds, indicating the lender’s profit margin.