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Prepayment Penalty

A prepayment penalty is a fee that a borrower must pay if they pay off their loan before the scheduled term. This penalty is meant to compensate the lender for lost interest income. It is important for borrowers to check for such clauses before taking a loan.

Repayment Schedule

A repayment schedule is a structured plan that details when and how the borrower will repay the loan. Loan apps typically offer flexible schedules based on the loan term and borrower’s preferences.

Minimum Payment

The minimum payment is the lowest amount the borrower must pay each month to remain in good standing with the loan. It typically includes both interest and a portion of the principal.

Loan Renewal

Loan renewal is the process of extending an existing loan’s term, often with new terms such as a different interest rate. Some online lending apps allow for loan renewals to help borrowers avoid default.

Microloan

A microloan is a small loan, usually given to individuals or small businesses. Online lending apps often provide microloans for personal expenses or small-scale business operations.

Loan Repayment Calculator

A loan repayment calculator is a tool provided by many loan apps that helps borrowers estimate their monthly payments based on the loan amount, interest rate, and loan term.

Pre-Approval

Pre-approval is an indication from the lender that the borrower qualifies for a loan, often based on initial credit checks. It gives the borrower an idea of how much they can borrow before submitting a full application.

Lender

A lender is an institution or individual that provides loans to borrowers. In online lending, the lender could be a traditional financial institution, a peer-to-peer network, or a fintech company.

Loan Amount

The loan amount is the total sum the borrower requests from the lender. The loan amount is often based on the borrower’s income, credit score, and the loan’s intended purpose.

Loan Disbursement

Loan disbursement is the process of transferring the approved loan amount to the borrower’s account. This typically happens after the loan agreement is signed and the funds are made available for use. The disbursement may occur as a lump sum or in...