Loan agreements are written in a dialect, and fluency is protection: borrowers who know exactly what “origination fee,” “utilization,” and “prepayment” mean sign better deals and get surprised less. This glossary defines the 41 terms that actually appear in personal lending — in offers through the BHG Loan network and everywhere else — alphabetically, in plain English, with the practical implication attached to each. Jump by letter, or read straight through as a remarkably efficient lending education.
A
Annual Percentage Rate (APR)
The APR is the true yearly cost of borrowing, expressed as a percentage. Unlike the base interest rate, APR includes fees and other loan costs, making it the most accurate figure for comparing loan offers. When evaluating a BHG Loan personal loan offer, always compare APRs rather than just stated interest rates.
Amortization
Amortization is the process of gradually paying off a loan through regular scheduled payments. Each payment reduces the principal balance and covers the interest accrued since the last payment. Early payments in a personal loan schedule typically cover more interest; later payments retire more principal.
B
Bad Credit
Bad credit generally refers to a FICO score below 580. Lenders view borrowers with bad credit as higher risk, which may result in higher interest rates or stricter eligibility requirements. Some lenders in the BHG Loan network specialize in personal loan options for borrowers with lower scores.
Balance Transfer
A balance transfer moves existing debt from one account to another, often to take advantage of a lower interest rate. Some borrowers use a personal loan to consolidate high-interest balances, achieving a similar effect with fixed monthly payments instead of revolving credit.
C
Co-Borrower
A co-borrower is a second person who applies for a loan alongside the primary applicant. Both parties share equal legal responsibility for repaying the debt, and both credit profiles factor into the approval decision. Adding a co-borrower with stronger credit can improve loan terms.
Collateral
Collateral is an asset pledged as security for a loan. If the borrower defaults, the lender may seize the collateral. Personal loans are typically unsecured, meaning no collateral is required, which is one of their key advantages over secured loan types such as auto loans or mortgages.
Credit Bureau
A credit bureau is an agency that collects and maintains consumer credit information. The three major US bureaus are Equifax, Experian, and TransUnion. Lenders pull your credit report from one or more bureaus when evaluating a personal loan application.
Credit Score
Your credit score is a three-digit number, most commonly a FICO score ranging from 300 to 850, that summarizes your credit history. Factors include payment history, amounts owed, length of history, new inquiries, and credit mix. A higher score generally means better loan terms.
Credit Utilization
Credit utilization is the percentage of your available revolving credit currently in use. A $2,000 balance on a $5,000 limit equals 40% utilization. Keeping utilization below 30% is generally recommended to maintain a healthy credit score.
D
Debt-to-Income Ratio (DTI)
Your debt-to-income ratio compares your total monthly debt obligations to your gross monthly income. Lenders use DTI to assess whether you can comfortably take on additional debt. A DTI below 36% is typically considered favorable, though individual lender thresholds vary.
Default
Default occurs when a borrower fails to make loan payments according to the agreed terms. Defaulting on a personal loan can result in collection activity, legal action, and serious damage to your credit score. If you anticipate difficulty, contact your lender proactively to explore options.
Disbursement
Disbursement refers to the release of approved loan funds to the borrower. Personal loan disbursements often occur via direct deposit to a checking account. Timelines vary by lender; some offer same-day or next-business-day funding after approval.
E
Equal Monthly Installment (EMI)
An equal monthly installment is a fixed payment amount made each month throughout the loan term. Each payment covers both interest and principal. Because the amount never changes, installment structures make personal loans easier to budget than variable-payment alternatives.
F
Fair Credit
A FICO score between 580 and 669 is generally classified as fair credit. Borrowers in this range may qualify for personal loans but often at higher rates than those with good or excellent credit. Raising your score before applying can improve the terms you receive.
Finance Charge
A finance charge is the total dollar cost of borrowing, including interest and applicable fees over the life of the loan. Lenders must disclose the finance charge under the Truth in Lending Act, making it easier to understand the full cost of a personal loan.
Fixed Interest Rate
A fixed interest rate remains constant for the entire life of the loan. Personal loans commonly carry fixed rates, which means your monthly payment amount never changes. This predictability makes budgeting straightforward and protects borrowers from rising market rates.
Forbearance
Forbearance is a temporary arrangement in which a lender agrees to reduce or pause loan payments for a borrower facing hardship. Interest may continue to accrue during the period. Request forbearance before missing payments to avoid negative credit reporting.
G
Grace Period
A grace period is a window after a payment due date during which a payment can be made without a late fee. Grace periods vary by lender, so confirm whether your personal loan includes one and how long it lasts before you sign.
H
Hard Inquiry
A hard inquiry occurs when a lender checks your credit report as part of a formal loan application. Each hard inquiry can temporarily lower your credit score by a few points. Soft-pull prequalification, offered by many lenders, does not affect your score.
I
Interest Rate
The interest rate is the percentage of principal a lender charges as the cost of borrowing, expressed annually. Unlike APR, the stated interest rate does not include fees. Personal loan rates depend on credit score, income, loan amount, and term.
J
Joint Loan Application
A joint loan application involves two people applying together, both equally responsible for the debt. Joint applications can help when one applicant has stronger credit, potentially producing a lower rate than either could secure alone.
L
Late Fee
A late fee is a penalty charged when a loan payment is not received by the due date or within any grace period. Late fees vary by agreement. Repeated late payments can also trigger negative credit reporting, so automatic payments are strongly recommended.
Loan Agreement
A loan agreement is a legally binding contract between borrower and lender outlining the principal amount, interest rate, repayment schedule, fees, and consequences of default. Always read your loan agreement carefully before signing it.
Loan Officer
A loan officer is a financial professional who evaluates, authorizes, or recommends approval of loan applications. They help borrowers understand available products and guide applications through approval. Some online lenders use automated underwriting instead.
Loan Principal
The loan principal is the original amount borrowed before any interest is applied. As you make monthly payments, the principal balance decreases. Interest is calculated on the remaining principal, so reducing principal faster generally reduces total cost.
Loan Servicer
A loan servicer manages the day-to-day administration of a loan on behalf of the lender, including collecting payments, maintaining records, and handling inquiries. In some cases the original lender and the servicer are different companies.
Loan Term
The loan term is the length of time over which a borrower agrees to repay. Personal loan terms typically range from 12 to 60 months. Longer terms mean lower monthly payments but more total interest paid over the life of the loan.
M
Minimum Monthly Payment
The minimum monthly payment is the smallest amount a borrower must pay each month to remain in good standing. For installment loans the payment is typically fixed. Paying only minimums on revolving accounts maximizes interest costs over time.
O
Origination Fee
An origination fee is a one-time charge by the lender to process a loan. It is usually a percentage of the loan amount and may be deducted from disbursed funds or added to the balance. Always factor origination fees into any comparison of offers.
P
Personal Loan
A personal loan is an unsecured installment loan usable for virtually any personal purpose. Unlike mortgages or auto loans, personal loans do not require collateral. Repayment is structured in fixed monthly payments over a defined term, typically 12 to 60 months.
Prequalification
Prequalification is an initial assessment of eligibility based on basic financial information. Most prequalifications use a soft credit pull that does not affect your score, and give you an estimate of potential terms before a formal application.
Principal Balance
Your principal balance is the remaining amount of the original loan you still owe, not including interest. Each payment decreases it. At the end of the term, the principal balance reaches zero and the loan is fully repaid.
R
Refinancing
Refinancing means replacing an existing loan with a new one, ideally with better terms such as a lower rate. Borrowers often refinance personal loans after their credit improves to reduce monthly payments or total interest paid.
Repayment Period
The repayment period is the span during which a borrower makes scheduled payments to repay in full. For personal loans through the BHG Loan network, repayment periods typically range from 12 to 60 months depending on lender and amount.
Revolving Credit
Revolving credit allows borrowing up to a set limit, repaying, and borrowing again; credit cards are the most common form. Unlike revolving credit, personal loans are installment credit with a fixed end date and fixed payment amount.
S
Soft Inquiry
A soft inquiry is a credit check that does not affect your credit score. Prequalification tools typically use soft inquiries, so you can check pre-approved offers at any time without risk to your credit standing.
U
Underwriting
Underwriting is the lender's process of evaluating an application to determine risk and set terms. Underwriters or automated systems review credit history, income, employment, and obligations. The decision determines approval and pricing.
Unsecured Loan
An unsecured loan is not backed by collateral. If a borrower defaults, the lender cannot automatically seize a specific asset; instead it may pursue collection or legal remedies. Personal loans are typically unsecured, so creditworthiness drives approval and pricing.
V
Variable Interest Rate
A variable interest rate changes over time based on a benchmark such as the prime rate. When market rates rise, so does the interest owed. Most personal loans carry fixed rates instead, providing payment stability throughout the term.
Verification Documents
Verification documents confirm the information on a loan application. Common examples include government-issued ID, recent pay stubs, bank statements, and sometimes tax returns. Having these ready before applying speeds up approval.
Y
Yield
In lending, yield refers to the return a lender earns on a loan, typically expressed annually. From a borrower's perspective, understanding yield clarifies why lenders price loans differently based on perceived risk and the rate environment.
Terms Borrowers Ask About Most
Three glossary entries earn the most follow-up questions from BHG Loan borrowers, so here is the extra sentence each deserves. On APR: it is the only number that makes two personal loan offers directly comparable, because the law requires it to swallow the mandatory fees — our full APR guide turns the definition into fluency. On prequalification: the soft-pull design is why checking personal loan options through BHG Loan costs zero score points — the hard inquiry waits until you commit to one lender. And on account access generally: your BHG Loans login is the working name borrowers use for the account portal on their funding lender's site — the BHG Loans login credentials created at e-signing open every payment, statement, and payoff function the servicer offers, as the FAQ details.
Putting the Vocabulary to Work
Terms stick best in context. Watch APR do its comparison work in our borrower's guide, see amortization become concrete numbers in the payment calculator, and read how underwriting weighs your file on the rates page. When an unfamiliar term surfaces in any loan document — through BHG Loan or anywhere — this page is built to be the thirty-second answer.
Two entries earn a practical postscript. On the BHG Loan side of the vocabulary: the BHG Loan network's fixed-rate standard means several variable-rate terms you may meet elsewhere — rate caps, adjustment periods — simply never apply to loans funded here. And on account terms: statements, payoff quotes, and payment histories are all documents your BHG Loans login generates on demand, so the vocabulary above doubles as a map of what the BHG Loans login can produce whenever paperwork is needed — for taxes, for disputes, or simply for the satisfying arithmetic of watching a balance fall.
Forty-one terms, one BHG Loans login, zero mysteries left in your next agreement.