Here is your glossary of all the commonly used terms of the financial lending industry which you may come across in your journey of getting a loan –
- Acceptance- It refers to the borrower’s consent to the terms and conditions of the loan agreement which includes the amount of the loan, its type, interest rate as well as the repayment period of the loan. This is also known as loan acceptance.
- Accrued Interest- It refers to the interest amount that has accumulated over a loan for a particular period of time but has not been paid by the borrower.
- Advance Disbursement- In the context of home loans, an advance disbursement of loan refers to the transfer of the loan amount by the lender to the borrower before the complete construction of the building. This is also known as part disbursement.
- Amortization- It refers to the process of repayment of a loan in a scheduled manner with a predetermined number of instalments including a part of the principal amount and interest.
- Amortization Schedule- It refers to a table that outlines the periodic payments on an amortization loan. It also mentions the breakup of the amount of principal and the amount of interest that together make the due EMI until the loan is paid off at the end of its term.
- Amortization Term- It refers to the total time period allowed to the borrower to repay the loan. The length of the term depends on the amount of EMI to be paid by the borrower.
- Application Fee- It refers to the charges that are levied by the lender for the processing of the loan.
- Appraisal- It refers to the inspection of a loan application to determine the ability of the borrower to return the loan within a particular loan term. Different lenders use different appraisal methods. This is also known as loan appraisal.
- Approved Term- It refers to a term in the loan agreements that has been mutually and officially consented to by the borrower and the lender. It is also known as a sanctioned term.
- Assessor- It refers to an individual or enterprise that evaluates a loan application based on the borrower’s credit record and credit score among other factors.
- Asset- It refers to a resource that is owned by an individual or an enterprise and has an economic value. It is pledged as collateral by the borrower at the time of taking a loan.
- Assessed Value- It is the monetary value of an asset that is determined by a loan assessor during its inspection to evaluate its worth as a collateral for the proposed loan application. It is also known as fair market value.
- Automatic Payment- It is a loan repayment option that ensures that the due EMIs get deducted automatically from the bank account of the borrower without any manual intervention. This is also known as auto debit. This facility gets implemented with the help of the National Automated Clearing House (NACH) of the National Payments Corporation of India (NPCI). It is a web-based solution which facilitates Banks, Financial Institutions, Corporates, and Government to do high volume electronic transactions in a repetitive and periodic manner.