While the short-term loan process is a lot simpler than traditional funding, the lending process can be confusing for first-time borrowers. There are many types of loans to choose from. In the glossary below, we will review commonly used terminology and loan types. These are terms you may come across while researching or applying for a small cash loan. Review their descriptions to choose the right loan for your financial situation and needs.

Short Term Loans

A small-dollar loan meant to be repaid in a short period of time. The repayment timeframe can be anywhere from a month to a year, depending on the lender.

Installment Loans

An installment loan is a loan you pay back with a fixed number of regular, equal payments over a set period of time.

Online Loans

An online loan is a type of funding that is only available from the lender online. The application process is conducted online. A lender may reach out via phone or email to confirm certain information with the applicant.

Cash Loans

Short-term loans are sometimes referred to as cash loans because they can be used to cover a wide range of expenses in an emergency.

Personal Loans

“Personal loans” is a term that covers a wide range of loans. A personal loan is a type of installment loan that can be used to cover just about any expense. Depending on the type of personal loan, it can be as small as $100 and as much as $100,000.

Payday Loans

Payday loans are small loans, typically between $100 and $1,200, that have very short repayment schedules. Payday loan lenders typically require repayment in two weeks or the borrowers next paycheck date.

Cash Advance Loan

Cash advance and payday loans are often used interchangeably. A cash advance requires that you repay your loan in full upon receiving your next paycheck.

Bad Credit Loans

Some lenders advertise their loans as “bad credit loans.” These types of loans are available to borrowers who are typically underserved and who have difficulty securing funding elsewhere. While these types of loans can help people in an emergency, they typically have higher than normal interest rates.

Fast Loans

These types of loans advertise funding in your bank account in as soon as one business day. The application process is quick and simple, and typically online. Most short-term loans are fast loans.

Emergency Loans

Emergency loans are loans that help borrowers in a bind. They may not have the most favorable rates or terms. These tend to be small-dollar loans.

Debt Consolidation Loans

Debt consolidation loans are used to combine debt from multiple lenders. This makes it easier to manage debt and can even lower your monthly payments.

Unsecured Loans

An unsecured loan allows you to get funding without having to put up collateral. Personal loans are unsecured loans.

Secured Loans

Secured loans require you to put up collateral to receive funding. Examples of secured loans include auto title loans and mortgages.

Annual Percentage Rate (APR)

The APR on a loan is very important. It determines how much you will owe overall. The annual percentage rate is an expression of the cost of credit – the loan’s interest rates plus fees as a percentage rate for the year.

Balloon Payment

A balloon payment is a large payment made at the end of a loan term.

Collection Agency

A collection agency is a third party hired by a lender to obtain repayment when a borrower is delinquent or has defaulted on repayment. Collection agencies are used by lenders who provide unsecured loans.

Credit Check

Before accepting a loan application, lenders will perform a credit check – this means running a report on a prospective borrower’s information to view their credit history. Reports are created by data processing companies called credit bureaus or credit reporting agencies.

Default

A borrower can default on a loan by missing several loan payments or by forgoing repayment. Defaulting on a loan can significantly damage your credit and make it difficult to secure credit or funding in the future.

Electronic Transfer

If you request a loan online, your funds may be sent to you via electronic transfer. If you opt for electronic transfer, your lender will require you to share your bank routing and account number to make the deposit into your account.

Loan Fees

Loan fees are charges added by your lender to process your loan. Some lenders require you to pay fees in addition to interest. These fees can include application fees, money transfer fees, and origination fees. You can use your loan APR to understand what you will owe overall, interest, and fees.

Maturity Date

Your maturity date is your due date. It is the day you are required to repay your loan in its entirety including any fees and interest.

Ready to Get Funding?

At Mountain Summit Financial, we’re here for you. If you’re ready to get the funding you need, start your short term loan request now.

Ready to Get Funding?

At Mountain Summit Financial, we’re here for you. If you’re ready to get the funding you need, start your short term loan request now.

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