Fig’s Plain English Dictionary of Payday Loan Terms

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Auto Loan

A loan that you take out in order to purchase a vehicle. An auto loan helps you buy a car that costs more than you can afford with cash. You make monthly payments to repay the loan over time. The terms of an auto loan depend on various factors, including your income and credit history.

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Bad Credit Loan

A loan available to consumers with a credit score below 630.

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Balloon Loan

A loan that is paid off with one large payment at the end of the term of your loan. On the day your loan is due you pay back all of the principal and interest at once.

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Credit Access Business (CAB)

A business that obtains credit (often in the form of a loan) for a consumer from an independent third-party lender. A Credit Access Business charges fees (see CAB Fees) in addition to the interest of a loan.

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CAB Fees

The fee charged to the consumer by the Credit Access Business for obtaining the third party loan. This fee is usually calculated as a percentage of the loan amount.

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CAB License

A license that all Credit Access Businesses must obtain. You have a right to view a Credit Access Business’ valid CAB license before you sign any loan documents. This is the license used by many payday lenders to operate in Texas.

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Certificate of Deposit (CD)

A savings tool that can offer a higher return on your money than most standard savings accounts. CD’s typically don’t have monthly fees but limit when and how often you can take the money out of the account.

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Credit Builder Loan

A small loan designed to help consumers establish or boost their credit profiles. Credit builder loans are specifically designed for customers who do not actually need a loan but want to build credit history. This loan is offered by some nonprofits, credit unions and a few banks.

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Credit Reporting

Any loan that reports loan performance to the major credit reporting agencies - Equifax, Experian or TransUnion. Credit Builder Loans will always report credit. However, title loans, payday loans, installment loans and other types of emergency or bad credit loans may not.

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Credit Reporting Agencies

Also known as credit bureaus, credit agencies compile all of your credit information and history. There are many specialty credit reporting agencies, but Equifax, Experian and TransUnion are the three major bureaus that lenders use to look at your credit reports.

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FICO Score

A credit score developed by FICO that is used by lenders to predict what will likely happen if they give you a loan. To create credit scores, they use information provided by one of the three major credit reporting agencies — Equifax, Experian or TransUnion. FICO itself is not a credit reporting agency

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Individual Development Accounts (IDA)

A special savings account that matches savings for lower income customers. The typical requirement is applicants earn less than 200% of the Federal Poverty Income level. When you save in an IDA, your savings are matched. This means that for every dollar you save you receive another dollar or more for free. While most organizations will provide a one-to-one match, we’ve seen up to an eight-to-one match.

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Installment Loan

A loan that is repaid by the borrower over multiple payments, also known as installments. Installments are generally monthly payments of equal size that include both interest and loan principal.

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Second Chance Account

A type of checking account that provides customers who have previously lost bank accounts a chance to start over and rebuild their relationship with traditional banks

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Title Loan

A short-term loan in which the borrower’s car is used as collateral. This is called a title loan because ownership of a car is established by the “title to a car.” If the loan is not repaid, the lender will take ownership of the car and sell it to make up for the loan amount

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Unsecured loan

A loan that doesn't require collateral

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Secured loan

A loan that requires collateral, like a car title

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