Clear Answers for Common Questions

If you cannot qualify for loans or are having difficulty obtaining credit through the normal channel, then a subprime loan may be your next port of call. A subprime loan is a loan that is often offered to who is not a "prime" lending candidate, such as someone with a ...

Often referred to as a call loan or a demand loan, the callable loan is simply a financial transaction in which the lender retains the right of demanding repayment of the full value of the loan. The lender’s demand usually includes the balance due, plus any applicable interest. When ...

An FHA loan is a mortgage loan that is insured by the U.S. Federal Housing Administration to help those who are buying homes for the first time or are in other special circumstances. An FHA loan offers a number of benefits over existing loans and are especially attractive to ...

Unsubsidized loans are student loans that make it possible for students to finance an education while attending a college or university. Students can choose to make interest payments while still in school or capitalize the interest and making payments after they have finished their education. As a rule, interest on ...

Asset conversion loans are an example of the type of short-term loans that are often made to businesses of various sizes. The expectation with an asset conversion loan is that the recipient of the loan will be utilizing the revenue received from the sale of an asset to repay ...

Day loans are short-term loans extended by banks to brokers. Sometimes referred to as a morning loan, the proceeds from the loan are used to purchase securities that are intended for delivery later in the day. Once the securities are received, they can then be pledged as collateral for ...

Loan prequalification is a process that pre-approves a homebuyer for a specific loan amount when purchasing a home. To document the loan prequalification, the homebuyer receives a special letter from the lending institution or loan officer. A loan prequalification can aid a homebuyer in the purchase of a home ...

Wraparound loans help to provide a source of additional loan revenue when a pre-existing loan is already in place. Essentially, the wraparound loan functions by encompassing the outstanding amount due on the existing loan, advancing an additional amount to the borrower, then uses the payments made on the new ...

Demand loans are loan agreements that provide the lender with the ability to demand full payment of the remaining balance of the loan at any point in time after the loan is executed. Unlike an installment loan, the demand format does not include a specific maturity date and may not ...

When a broker makes arrangements to borrow funds on behalf of an investor, lending institutions generally charge what is known as a broker loan rate. Essentially, the broker loan rate is a special rate of interest that banks and other financial institutions extend to a broker as part of the ...

Subsidized loans are student loans that provide interest benefits while the student is attending an education institution as well as selected time periods after the student leaves the institution. The federal government pays the interest on a subsidized loan during the time the student remains in school and also during ...

A bridge loan is a form of short-term financing which extends a line of credit to a borrower for a short period of time, typically at a very high rate of interest. As the name suggests, a bridge loan bridges the gap between more permanent methods of financing; these ...

A collateral loan is also called a secured loan. It is a loan obtained from a banking or other financial institution, where in exchange, the creditor may sell that which is offered for collateral if the loan is unpaid. A collateral loan is often offered at a lower interest rate ...

No documentation loans are loan applications that do not require the usual information needed to process a loan request. With a no doc loan, the borrower does not have to supply information regarding current employment, sources of income, or assets currently in the possession of the applicant. Generally, the no ...

A discount loan is a loan arrangement where the interest and any other related charges are calculated at the time the loan is granted. At the same time, the total of the interest and other charges are subtracted from the face amount of the discounted loan. Instead of receiving the ...

There are three main types of school loans: federal student loans, parent loans, and private loans. Each type of school loan has a specific application process and eligibility requirements. It is in a person’s best interest to only apply for school loans if they have exhausted other resources such ...

Hard money loans are loan arrangements that involve backing the amount of the loan with real estate that is owned by the borrower. With a hard money loan, the lender does not take into consideration the current creditworthy status of the borrower. As long as the property that is used ...

One of the more common types of financial lending that is extended to businesses, the bank term loan is a certain type of loan that involves a fixed maturity and an amortization of the principal amount of the loan. Bank term loans may be used to establish a line of ...

The housing bubble that has been driving up prices across the country has left house buyers looking for alternative ways to finance their dream home. Unfortunately, many starter homes in certain areas of the country have prices that leave buyers in sticker shock. Many of these buyers find that jumbo ...

A broker loan is usually described as a loan granted to a broker or brokerage firm by a bank. This money is typically lent for the purpose of financing margin accounts, building inventories of stocks, or funding the underwriting of securities offered for the first time. A broker loan may ...

Commercial loans are bank loans that are granted to different types of business entities. In some cases, the loan is extended to assist a company with short term funding for basic operational functions, such as meeting payroll or purchasing supplies that are used in the production of the goods manufactured ...

A balloon loan is a type of short-term mortgage. The balloon loan is often compared to the fixed-rate mortgage, as it shares some of its features. For example, a balloon loan offers the borrower a level payment amount over the term of the loan. However, unlike fixed-rate ...

An unsecured loan is money lent from one party to another without any collateral to secure its repayment. In most cases, these types of loans are considered somewhat high-risk, since the lender does not usually have any way of forcing the borrower to comply with the terms or make ...

An amortized loan is a loan where payments are the same amount each month. Each payment pays some of the interest on the loan and some of the principal, or amount borrowed. This type of loan can be total, meaning the payments will stay the same until the set period ...

An education loan is a loan taken to help pay for an education, usually at a college or trade school, but may also be used to pay for private schools or prep schools as well. These loans are available in several different types. These are student loans, parent loans and ...

A Perkins Loan is an education loan provided by the United States government on a need-based basis to students studying at any one of 1,800 eligible educational institutions. Perkins Loans are open to American citizens and non-residents alike, as long as they are enrolled at least half ...

Classified loans are bank loans that have been issued according to the terms and regulations of the bank, but later become somewhat suspect by the bank examiners. Often, this takes place when information that was not available at the time of issue is uncovered, or circumstances with the borrower undergo ...

Conforming loans are understood in the United States to be any loan that is structured as a mortgage loan and meets the requirements laid out in GSE guidelines. When loans are issued that do not comply with the provisions set by the GSE guidelines, the transaction is understood to be ...

The major difference between subsidized and unsubsidized loans involves the payment of interest. With a subsidized loan, someone other than the borrower is responsible for paying the interest on the loan. When a loan is unsubsidized, the borrower must pay interest on the loan, beginning at the time of disbursement ...

It is possible to consolidate student loans to receive a lower interest rate, longer term, or lower monthly payments. A few major lenders issue student loans, and these lenders can consolidate student loans by paying them off and issuing you a new loan under different terms. Carefully choose whether to ...

Deciding whether or not to take out a student loan is a major step. You should be reasonably sure that a student loan will help you to increase your income in the long run. Unlike credit card debt, a student loan is considered good debt rather than bad. This is ...

Character loans are extensions of funding that are granted based on factors other than the declaration of collateral. Generally, a character loan is granted when the lender determines that the loan will be repaid in a timely manner without the need for some sort of security. Signature loans are one ...

A loan is a financial transaction in which one party (the lender) agrees to give another party (the borrower) a certain amount of money with the expectation of total repayment. The specific terms of a loan are often spelled out in the form of a promissory note or other contract ...

A prepayment penalty is a monetary fee that is assessed to a borrower when he or she pays a loan off earlier than was originally agreed. Credit institutions enforce this in order to guarantee they make a certain amount of money from loaning money to a borrower. Over the years ...

When you take out credit or a loan with a lender, there will be a repayment plan set in place. The repayment terms detail when money is to be paid back to the lender, usually monthly or weekly. If you miss these payments, then the lender may class the credit ...

Sometimes referred to as a zero down home loan, the no-down home loan provides a means of financing the purchase of a home when there is not cash on hand to provide a down payment. While more difficult to obtain than a traditional mortgage loan arrangement, the no-down ...

Commercial finance is the straightforward process of providing loans to different types of companies that are engaged in money making efforts. As such, commercial financing does not involve the process of making loans for such items as the purchase of a private home or as a means of financing the ...

A consolidation loan is a loan that can help you take small or large amounts you owe to different people and place the debt obligation with one company, instead of in the hands of the several different lenders. People may choose this option if they’re refinancing a house and ...

Working capital loans are a strategy that can allow a company to function while reaching a point where generated revenue begins to cover the cost of doing business. Essentially, a working capital loan is a short-term loan that is designed to cover the usual day to day operations of ...

There are many types of student loans to choose from, and it's important to find one that is right for your particular situation. The two main types of loans are federal loans and private loans. There are three main types of federal loans: Federal Stafford Loans - These are awarded ...

Loan-to-value (LTV) is a ratio that depicts the relationship of a loan amount with the value of a property. This ratio is obtained by dividing the amount of a loan by either the sale price of the property or the property’s appraised value. The lower of the ...

A negative amortization or Neg Am loan is a type of loan that is usually used in the purchase of real estate and may be helpful to first time buyers who can’t afford huge upfront mortgage payments. In a Neg Am loan, initial payments do not even cover the ...

A remortgage is a process that replaces an existing mortgage loan with a new loan from a different lender. The new lender repays the existing mortgage debt to the original loan provider. The borrower is then left with just one mortgage loan, repayable to the new lender. The terms remortgage ...

Liar loans are a type of mortgage arrangement that is structured with a low-documentation or no-documentation format. Because the amount of detail included in the mortgage arrangement is limited and may go unverified, there is a greater degree of possibility for unethical borrowers and lenders to misrepresent the ...

Full documentation loans are loan applications that require a high level of information about employment, assets, and sources of income of the applicant. The full doc loan is one of the more common types of loan applications in use within the United States. Many mortgage lenders make use of a ...

A term loan is a monetary loan that is repaid in regular payments over a set period of time. Term loans usually last between one and ten years, but may last as long as 30 years in some cases. A term loan usually involves an unfixed interest rate that will ...

A conforming loan is a loan that conforms to limits set by Fannie Mae and Freddie Mac. Any loan that exceeds these limits is considered a jumbo loan, which results in higher interest rates. Fannie Mae and Freddie Mac are both private, stockholder-owned companies which operate under congressional charters ...

Secured loans are those loans that are protected by an asset or collateral of some sort. The item purchased, such as a home or a car, can be used as collateral, and a lien can be placed on such purchases. The finance company or bank will hold the deed or ...

The term subprime loan is somewhat confusing. Since sub means below, it would be reasonable to assume that a subprime loan is desirable as being below the prime rate of interest offered at a given time. In fact, the opposite is true. The subprime loan is offered at above the ...

A margin loan or a margin account is a loan made by a brokerage house to a client that allows the customer to buy stocks on credit. The term margin itself refers to the difference between the market value of the shares purchased and the amount borrowed from the brokerage ...

Often referred to as parallel loans, the concept of back-to-back loans involves two companies that are located in different countries. As a means of avoiding any factors associated with the risk of foreign exchange rates changing, the two companies agree to loan each other a fixed amount, guaranteed ...

A home equity loan allows homeowners to access the equity in their primary residence without having to sell the property. Equity is the difference between what a home is worth and what is owed against it. Traditionally, home equity loans were called second and third mortgages. Equity in a home ...

A Stafford Loan is a loan for students attending colleges or, in some cases, trade and business schools. Student loans are one of the primary means by which most can pay for their education and additionally offset the financial burden of attending a school on a full-time basis. A ...

A loan schedule is a report that gives details about loan repayment, usually in regard to a mortgage or other structured interest loan. There are several items listed in a loan schedule, including the principal, or the amount of money owed. This figure is the amount of the loan after ...

A loan stock is a type of fixed income security, a loan that is made to a company. Although the term might suggest otherwise, the holder of a fixed income security is merely the company’s creditor and does not have any say in their business. There are two types ...