Glossary
Installment loan terms, in plain English.
Twenty-four words that appear on a small-dollar loan agreement, defined without the circular jargon that usually surrounds them.
Figures on this page were checked against Galt Credit’s published state disclosures on . How we source figures
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The four terms that decide what a loan costs you are the amount financed (what reaches your account), the finance charge (the dollar cost of borrowing), the annual percentage rate (the cost expressed yearly, so you can compare loans) and the total of payments (everything added up). If a disclosure is missing any of the four, do not sign it.
Annual percentage rateAmount financedACH authorisationCredit Access BusinessCredit Services OrganizationCooling-off periodCovered borrowerFinance chargeHard inquiryInstallment loanInstant bank verificationLate fee
- Annual percentage rate (APR)
- The yearly cost of credit expressed as a percentage, including interest and most fees. It is the only number that lets you compare two loans of different sizes and lengths on equal terms. On Galt Credit’s published Texas examples the APR is approximately 598%.
- Amount financed
- The money that actually reaches your bank account, as distinct from the total you will repay. On a $500 loan the amount financed is $500 while the total of payments is $1,452.81.
- ACH authorisation
- Your written permission for a lender to draw payments electronically from your checking account. You can revoke it in writing, but revoking it stops the debits without cancelling the debt, so you must arrange another way to pay at the same time.
- Credit Access Business (CAB)
- A Texas licence category for a company that arranges a loan between a consumer and a third-party lender, guarantees it and services it, charging its own fee for doing so. In Texas, Galt Financial Solutions LLC operates as a CAB rather than as a lender.
- Credit Services Organization (CSO)
- A Texas-registered business that obtains an extension of credit for a consumer from someone else. The CSO fee is a separate charge from the lender’s interest, and both are combined into the disclosed APR.
- Cooling-off period
- A window after signing during which you can cancel without cost. Texas borrowers have three calendar days from signing the loan documents; most states do not provide one.
- Covered borrower
- An active-duty service member, spouse or dependent protected by the Military Lending Act. Covered borrowers cannot be charged more than a 36% Military APR, so high-cost installment loans are not offered to them.
- Finance charge
- The dollar cost of borrowing: everything you repay above the amount financed. On the published $500 bi-weekly example it is $952.81.
- Hard inquiry
- A credit check recorded when you formally apply for credit. It can reduce your score slightly and stays visible to other lenders for about two years.
- Installment loan
- A fixed sum repaid in a set number of equal payments over a fixed period, with a known end date. Each payment covers interest and fees for the period plus a portion of the principal.
- Instant bank verification
- An electronic check of the account you already use, confirming that income arrives on the rhythm you described and that the account can support another debit. It replaces faxed pay stubs.
- Late fee
- A charge applied when a payment is overdue. On this product it is $7.50 or 5% of the late payment, whichever is greater, once a payment is more than ten days past due.
- Origination fee
- An upfront charge some lenders deduct from the loan proceeds. Galt Credit does not charge one separately from the disclosed finance charge.
- Payday alternative loan (PAL)
- A small loan offered by federal credit unions, capped at 28% APR, in amounts from $200 to $2,000. Almost always the cheapest small-dollar credit available to someone with damaged credit.
- Prepayment penalty
- A fee charged for paying a loan off early. This product has none: you pay only the interest accrued and fees earned up to the day you settle.
- Principal
- The amount borrowed, before interest and fees. On an installment loan the principal falls with every payment, which is what makes the loan finish itself.
- Returned item fee
- A charge applied when a payment is dishonoured, typically for insufficient funds. It is $30.00 on this product.
- Rollover / renewal
- Paying a fee to push a loan’s due date out without reducing the balance. It is the mechanism behind most of the harm caused by two-week single-payment loans, and it is what an installment structure removes.
- Soft inquiry
- A credit check that does not affect your credit score and is not shown to other lenders as an application. Galt Credit uses one, which is why checking what you qualify for costs you nothing.
- Single-payment loan
- A loan repaid in full, plus fees, on one future date — usually your next payday. Commonly renewed when the whole balance will not fit into one paycheck.
- Total of payments
- Every payment added together: what the loan really costs you. It is the figure most borrowers skip and the one worth reading first.
- Unsecured loan
- A loan with no collateral pledged against it. Nothing can be repossessed if it goes wrong, though the debt can still be reported and placed with collections.
- Underwriting
- The lender’s process of deciding whether to lend and how much. Here it leans on verified income and bank account activity more than on a credit score.
- Verification
- Confirmation of your identity, income and banking history before funding. It is the reason a pre-approval is not a loan and approval is never guaranteed.
Sources
Where these figures come from.
- Galt Credit — Texas rates, terms and fee schedule — CSO/CAB structure, published APR and worked payment examples
- Galt Credit — rates and terms by state — Missouri, Wisconsin and Utah amounts, terms and state regulators
- Consumer Financial Protection Bureau — Independent research on single-payment loans and renewal cycles
- National Credit Union Administration — payday alternative loans — The 28% APR cap on credit union PAL products
Rates, fees, amounts and availability change. Where this page and the lender’s current disclosures disagree, the lender’s disclosures are correct.
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