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Enable Loans Glossary of Personal Loan Terms
Last updated:Loan paperwork uses its own vocabulary. This enable loans glossary defines 44 terms you will meet on offers, disclosures and credit reports, in two to four sentences each.
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Glossary
Personal loan terms, A to Z
ACH (automated clearing house)
The ACH network is the electronic system US banks use to move money between accounts. Lenders typically send personal loan funds to your checking account by ACH deposit and collect monthly payments by ACH debit. Transfers usually settle in one to two business days, which is one reason funding is rarely instant and why the enable loans application asks for checking account details.
Amortization
Amortization is the process of paying off a loan through a schedule of equal payments, each split between interest and principal. Early payments on a personal loan carry more interest because the balance is highest; later payments go mostly toward principal. An amortization schedule lists that split for every payment until the balance reaches zero.
APR (annual percentage rate)
APR expresses the yearly cost of borrowing as a percentage, combining the interest rate with certain required fees such as an origination fee. Because it folds those costs in, APR is the best single number for comparing enable loans offers of the same amount and term. Typical APRs for personal loans in the $500 to $5,000 range run from about 6% to 35.99%, an estimate that varies by lender, credit, income and state.
Autopay discount
An autopay discount is a small APR reduction, often a fraction of a percentage point, that some lenders give when you agree to automatic payments from your bank account. It lowers your cost slightly and makes a missed payment less likely. Check whether the discount disappears if you later cancel autopay.
Bankruptcy
Bankruptcy is a federal court process that can discharge or reorganize debts a person cannot repay. Chapter 7 can remain on a credit report for up to ten years and Chapter 13 for up to seven. Many lenders decline or limit personal loan offers for applicants with a recent or open bankruptcy.
Charge-off
A charge-off happens when a lender writes off a severely delinquent debt as a loss, often after about 180 days without payment. The debt is still owed and may be sold to a collection agency. A charge-off is one of the most damaging marks a credit report can carry.
Co-signer
A co-signer is a second person who signs the loan agreement and becomes legally responsible for repaying it if the main borrower does not. Adding a co-signer with stronger credit or income can improve the chance of an offer or lower the APR. Not every lender allows co-signers, and missed payments hurt both people's credit.
Collateral
Collateral is an asset, such as a car or savings account, pledged to secure a loan so the lender can claim it if the loan is not repaid. Most personal loans of $500 to $5,000 are unsecured and require no collateral. Secured options may carry lower APRs but put the pledged asset at risk.
Credit bureau
A credit bureau is a company that collects and sells information about how consumers use credit. The three national bureaus are Equifax, Experian and TransUnion. Lenders report your personal loan payments to one or more of them, and those reports feed the credit scores future lenders review.
Credit report
A credit report is the record a credit bureau keeps of your accounts, balances, payment history, inquiries and certain public records. You can request free reports from all three bureaus at AnnualCreditReport.com. Checking yours before an enable loans application lets you dispute errors that could raise the APR you are offered.
Credit score
A credit score is a three-digit number, usually from 300 to 850 for FICO and VantageScore models, that summarizes the risk shown in your credit report. Payment history and amounts owed carry the most weight. A higher score generally leads to lower APR offers on a personal loan, though lenders also weigh income and existing debt.
Credit utilization ratio
Credit utilization is the share of your available revolving credit that you are using, such as a $1,500 balance on a $5,000 card limit, or 30%. Lower utilization usually helps credit scores. Paying down card balances with an installment loan can lower utilization, provided the cards are not run back up.
Debt consolidation
Debt consolidation means combining several debts, often credit cards or medical bills, into one new loan with a single fixed payment. It can save money when the new APR is lower than the old rates and the term is not stretched too far. The savings disappear if the paid-off cards fill up again.
Debt-to-income ratio (DTI)
Debt-to-income ratio compares your monthly debt payments with your gross monthly income. Someone paying $900 a month in debts on a $3,000 income has a DTI of 30%. Lenders use DTI to judge whether a new personal loan payment fits your budget, and many prefer it below roughly 36% to 43%, depending on the lender.
Default
Default is the point at which a borrower has failed to repay as the loan agreement requires, usually after several missed payments. The exact trigger is defined in each agreement. Default can lead to collection activity, a charge-off, a lawsuit in some cases and lasting credit damage.
Disbursement
Disbursement is the moment the lender releases loan funds to you, usually by ACH deposit to your checking account. For personal loans, disbursement often happens as soon as the next business day after approval, depending on the lender and your bank. Any origination fee is typically subtracted before the money is sent.
Equal Credit Opportunity Act (ECOA)
The Equal Credit Opportunity Act is a federal law that bars lenders from discriminating on the basis of race, color, religion, national origin, sex, marital status, age, or receipt of public assistance income. It also requires lenders to tell you why an application was denied, or how to ask, within set timelines.
Fair Credit Reporting Act (FCRA)
The Fair Credit Reporting Act is the federal law governing how credit information is collected, shared and corrected. It gives you the right to see your credit reports, dispute inaccurate items and know when a report was used against you. Lenders must have a permissible purpose before pulling your credit.
Finance charge
The finance charge is the total dollar cost of credit, including interest and certain fees, if you make every payment on schedule. It appears in a prominent box on the Truth in Lending disclosure. Using the representative example, $2,000 over 12 months at 21.49% APR carries an estimated finance charge of about $240.40.
Fixed rate
A fixed rate stays the same for the entire loan term, so your payment does not change. Most personal loans of $500 to $5,000 are fixed-rate installment loans, which is why a personal loan payment stays level. Fixed rates make budgeting easier and protect you if market rates rise after you sign.
Grace period
A grace period is the number of days after a personal loan due date during which a payment can still arrive without a late fee. Lengths vary by lender and state, commonly around 10 to 15 days. A payment made within the grace period is not usually reported to the credit bureaus as late.
Hard inquiry
A hard inquiry is a credit check a lender makes when you formally apply for credit, and other lenders can see it on your report. It may lower your score by a few points and stays on your report for two years, though its effect usually fades within months. The lender you choose typically runs one before final approval of a personal loan.
Installment loan
An installment loan is borrowed as a lump sum and repaid in a fixed number of scheduled payments, usually monthly. A personal loan, an auto loan and a mortgage are all installment loans. Once the last payment is made, the account closes and cannot be borrowed against again.
Interest rate
The interest rate is the percentage a lender charges on the principal you borrow, before fees. It is usually lower than or equal to the APR, which adds required fees into the yearly cost. Two personal loan offers with the same interest rate can have different APRs if one charges an origination fee.
ITIN (individual taxpayer identification number)
An ITIN is a nine-digit tax processing number the IRS issues to people who need to file US taxes but are not eligible for a Social Security number. Some lenders accept an ITIN in place of an SSN on a personal loan application, while others do not. Lenders that accept ITINs may ask for added proof of identity and income.
Joint application
A joint application is a loan request made by two borrowers who share equal responsibility for repaying it and both have access to the funds. Lenders consider both incomes and credit histories, which can help a couple qualify for a larger amount. Unlike a co-signer, a joint borrower is a full owner of the loan.
Late fee
A late fee is a charge a lender adds when a personal loan payment arrives after the grace period ends. It may be a flat dollar amount or a percentage of the payment, within limits set by state law. The fee amount must be listed in the loan agreement before you sign.
Loan agreement
The loan agreement is the binding contract between you and the lender that sets out the amount, APR, payment schedule, fees and what happens if you miss payments. Read it fully before signing, including any arbitration clause and prepayment terms. Our service is not a party to the agreement, as the enable loans website explains in its disclosures.
Loan term
The loan term is the length of time you have to repay, stated in months. Personal loans typically run 3 to 60 months, most often 6 to 36 months for $500 to $5,000. A longer term lowers each payment but raises total interest, so pick the shortest term whose payment fits comfortably.
Origination fee
An origination fee is a one-time charge some lenders take for processing a loan, commonly a percentage of the amount borrowed. It is usually deducted from the funds before they reach your account, so you receive less than the loan amount. Because it is part of the APR, comparing APRs accounts for it.
Prepayment penalty
A prepayment penalty is a fee some lenders charge if you pay off a loan early, compensating them for lost interest. Many personal loan lenders do not charge one, but the loan agreement will say if yours does. Without a penalty, paying ahead on a simple-interest loan reduces total interest.
Prequalification
Prequalification is an early estimate of whether a lender may offer you a loan and on what rough terms, usually based on a soft credit inquiry. It does not affect your credit score and does not commit the lender to final approval. Final terms can change after verification and a hard inquiry.
Principal
Principal is the amount you borrow, separate from interest and fees. Each monthly payment reduces principal by a portion, and interest is charged on the remaining principal balance. On a $2,000 personal loan, the principal is $2,000 even if an origination fee reduces the amount deposited.
Promissory note
A promissory note is a signed written promise to repay a stated amount on stated terms. For most personal loans, the promissory note is part of the loan agreement you sign electronically. It is the document that makes the debt legally enforceable.
Representative example
A representative example shows what a typical loan might cost using sample figures, so you can gauge scale before you see a real offer. The example used across this site is $2,000 over 12 months at 21.49% APR, about $186.70 a month and about $2,240.40 in total, an estimate only. Your actual APR, payment and total depend on the lender's offer.
Returned payment fee
A returned payment fee is charged when a scheduled payment fails, usually because the bank account lacks funds or was closed. Your bank may also charge its own insufficient-funds fee for the same event. Keeping a small cushion in your account around the due date helps avoid both.
Revolving credit
Revolving credit is a credit line you can borrow against, repay and borrow against again up to a limit, with payments that change as the balance changes. Credit cards and home equity lines are revolving accounts. A personal loan differs because it is a fixed lump sum with a set payoff date.
Secured loan
A secured loan is backed by collateral the lender can claim if you default, such as a vehicle title or a savings deposit. Securing a loan can make approval easier or lower the APR. The tradeoff is that you could lose the asset if you cannot keep up with payments.
Simple interest
Simple interest is charged only on the outstanding principal, not on previously accrued interest. Most personal loans use simple interest calculated daily or monthly, so paying early or making extra payments directly reduces what you owe in total. Paying late lets more interest build up before your payment posts.
Soft inquiry
A soft inquiry is a credit check that does not affect your credit score and is not visible to other lenders. Checking your own credit, prequalification and many initial reviews of a personal loan request use soft inquiries. Soft inquiries appear only on the copy of the report you request yourself.
Truth in Lending disclosure
A Truth in Lending disclosure is the federally required summary of a loan's key costs, shown before you sign. It lists the APR, finance charge, amount financed, total of payments and payment schedule in a standard format. Comparing these boxes across enable loans offers is the clearest way to see which personal loan costs less.
Underwriting
Underwriting is the lender's process of reviewing your personal loan application to decide whether to offer a loan and on what terms. It typically covers credit history, income, existing debts, bank account activity and identity checks. Our service does not underwrite; each lender in the network does its own review.
Unsecured loan
An unsecured loan requires no collateral; the lender relies on your credit and income to decide. Most personal loans from $500 to $5,000 are unsecured. Because the lender takes more risk, unsecured loans can carry higher APRs than secured ones for the same borrower.
Variable rate
A variable rate can rise or fall during the loan term because it is tied to a benchmark index. Payments on a variable-rate loan can change from month to month. Variable rates are uncommon on small personal loans but common on credit cards and some lines of credit.
A to C: APR, amortization and other enable loans basics
Terms from A to C cover how enable loans offers are priced, repaid and reported: APR, amortization, ACH transfers, autopay discounts, co-signers, collateral and the credit bureaus that track every payment you make.
People comparing enable loans offers meet these words first, because APR and the payment schedule appear at the top of every offer screen. If you want to see how APR moves with credit, income and state, our guide to typical APR ranges puts real estimate ranges next to each factor.
D to F: debt, disclosures and federal rules
Entries from D to F explain how lenders reviewing enable loans requests judge what you can afford and which federal laws protect you, from debt-to-income ratio and default to the Equal Credit Opportunity Act and the finance charge.
Debt-to-income ratio deserves extra attention, since it often decides whether a request gets an offer at all. Our article on what a debt-to-income ratio is and why lenders care works through the math with sample budgets. The enable loans application asks about income and pay frequency partly so lenders can estimate this ratio.
G to L: inquiries, installment loans and the loan agreement
For anyone weighing enable loans, the G to L range covers what happens during and after a credit check and the documents you sign, including grace periods, hard inquiries, installment loans, ITINs, joint applications, late fees and the loan term.
Hard inquiries cause more worry than almost any other term here, and enable loans reviews often raise them. Most lenders reviewing enable loans requests start with a soft check, and a hard inquiry usually follows only once you choose an offer. Our explainer on what a hard inquiry does to your credit covers how long it lingers and how rate shopping is treated.
O to R: fees, principal and the representative example
Words from O to R deal with what enable loans offers actually cost and what you owe: origination fees, prepayment penalties, prequalification, principal, promissory notes, returned payment fees and revolving credit.
The representative example on this list ties several terms together. At an estimated 21.49% APR, a $2,000 personal loan over 12 months comes to about $186.70 a month. The personal loan calculator applies the same amortization math to any amount from $500 to $5,000, so you can test how term length shifts the total.
S to Z: interest types, Truth in Lending and underwriting
The final group, S to Z, explains for enable loans shoppers how interest is calculated and how lenders decide, covering secured and unsecured loans, simple interest, soft inquiries, the Truth in Lending disclosure, underwriting and variable rates.
The Truth in Lending disclosure is where most of the terms in this glossary show up together, in standardized boxes. Our walkthrough on how to read a Truth in Lending disclosure points to each box and explains what to compare between two offers.
Using these definitions when you compare enable loans offers
Keep this page open while you review an offer. Match each line of the lender's disclosure to its definition here, then compare APR, total of payments and fees across offers rather than looking only at the monthly payment.
A practical order works well for most people searching for enable loans: confirm the amount financed after any origination fee, check whether the rate is fixed, read the late fee and prepayment penalty lines, and then compare the finance charge. Enable loans reviews from borrowers often mention that knowing these terms in advance made offers faster to judge.
If a term in your loan agreement is missing from this list, ask the lender to explain it in writing before you sign. Lenders must answer questions about their own disclosures, and the enable loans website FAQ covers the common ones, and a clear answer is a good sign about how they handle customers. On the enable loans website, the request form itself never asks you to agree to loan terms; that happens only with the lender you choose.
FAQ
Questions about this page
Is APR the same thing as the interest rate on a personal loan?
Not quite. The interest rate is the charge on principal alone, while APR adds required fees such as an origination fee, expressed as a yearly percentage. When a lender charges no fees, the two can match; otherwise APR is higher and is the better figure for comparing offers.
Which glossary terms matter most when reading an enable loans offer?
Focus on APR, finance charge, amount financed, loan term, origination fee and prepayment penalty. Together they tell you what the personal loan will cost in total, how much cash actually reaches your account and whether paying early saves money.
Why does the glossary separate installment loans from revolving credit?
They behave differently on your credit report and in your budget. An installment loan has a fixed payment and end date, while revolving credit lets balances rise and fall. Lenders and scoring models treat them separately, which is why paying cards down with a personal loan can lower utilization.
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