MakwaLoans
This glossary defines 42 lending terms in plain English — from ACH transfer to verification — so you can read a makwa loan offer, or any personal loan agreement, without a law degree. Every heading is anchored, so you can link straight to a single definition.
Skim alphabetically or dip in from the table of contents. Where a single definition cannot carry the full story, the deeper guides can: the rates page explains how APR gets set, the payment calculator turns any rate into a monthly figure, and the FAQ answers the practical questions these terms tend to raise. Makwa Loans publishes all three so borrowers can check our definitions against real numbers.
A – B
The first group covers the plumbing of a personal loan: how money physically moves between accounts, how repayment schedules are built, how the true yearly cost is expressed, and who the parties to the agreement actually are.
ACH Transfer
An ACH transfer is an electronic payment sent through the Automated Clearing House, the network U.S. banks use to move money between accounts. Lenders use ACH both to deposit your makwa loan funds and to collect monthly payments. Standard transfers settle in one to two business days.
Amortization
Amortization is the process of paying a loan down on a fixed schedule where each payment covers that month's interest first and principal second. Early payments are interest-heavy and later ones principal-heavy, yet the dollar amount stays the same. A fully amortized personal loan reaches exactly zero on its final due date.
Annual Percentage Rate (APR)
APR is the yearly cost of borrowing expressed as a percentage, including both interest and most required fees. Because it folds fees in, APR is the fairest single number for comparing personal loan offers. Typical APRs run from around 6% to 36%, with small short-term loans sometimes pricing higher.
Autopay
Autopay is an authorization letting your lender pull each payment from your bank account automatically on the due date. Most borrowers enable it to avoid late fees, and some lenders knock a small discount off the rate for it.
Borrower
A borrower is the person who signs the loan agreement and takes legal responsibility for repaying the money. Through Makwa Loans, the borrower submits one request and reviews offers, but the lending relationship itself is always between the borrower and the individual lender who funds the personal loan.
C – D
Terms from collateral through default describe risk: what secures a loan, who vouches for whom, how your history gets recorded and scored, how lenders measure the load you already carry, and what happens when repayment stops.
Collateral
Collateral is property — a vehicle title, savings account, or other asset — pledged to secure a loan, which the lender can claim if you stop paying. Most small personal loans are unsecured and require none. Offering collateral can lower the rate but puts the asset genuinely at risk.
Co-signer
A co-signer is a second person who signs the agreement and becomes fully responsible if the primary borrower stops paying. A co-signer with stronger credit can turn a decline into an approval or lower the price of a personal loan. Missed payments damage both parties' credit equally.
Credit Bureau
A credit bureau is a company — chiefly Equifax, Experian, or TransUnion — that compiles your borrowing history into a credit report. Lenders pull these reports during underwriting and report your payment behavior back.
Credit Score
A credit score is a three-digit number, commonly 300 to 850, summarizing how risky your credit history looks to a scoring model. Payment history and amounts owed weigh heaviest. Many lenders offering a small personal loan work with scores in the mid-500s, pricing the added risk into the APR.
Debt-to-Income Ratio
Debt-to-income ratio, or DTI, is your total monthly debt payments divided by your gross monthly income. A borrower earning $3,000 monthly with $900 in debt payments has a 30% DTI. Lenders use DTI to judge whether a new personal loan payment fits inside your existing budget.
Default
Default is the formal status a loan enters after payments have been missed long enough — the trigger point is defined in your agreement. Consequences include collection activity, serious credit damage, and sometimes lawsuits.
E – F
Entries from early payoff through fixed interest rate deal with cost control: ending a loan ahead of schedule, signing documents electronically, measuring the full dollar price of borrowing, and locking a rate so it cannot drift upward.
Early Payoff
Early payoff means clearing your remaining balance before the final scheduled due date. Because interest accrues on the outstanding balance, finishing early cancels interest that was never charged yet. Most small personal loan agreements allow it without penalty, but the prepayment clause is always worth reading before you sign.
Electronic Signature
An electronic signature, or e-signature, is a legally binding way to sign a loan agreement online by typing, clicking, or drawing your name. Federal law gives it the same force as ink. E-signing is the moment a personal loan offer becomes a real obligation, so read the agreement completely first.
Finance Charge
The finance charge is the total dollar cost of borrowing: all interest plus required fees over the life of the loan. Lenders must disclose it before you sign. On a $2,000 personal loan at 24% APR over twelve months, the finance charge is roughly $269 — an estimate that varies by lender.
Fixed Interest Rate
A fixed interest rate stays the same from the first payment to the last, which keeps every monthly payment identical. Nearly all small installment loans use fixed rates. The predictability makes budgeting simple: the payment you see in the agreement is the payment you make until the balance hits zero.
G – I
Grace period through interest are the terms that decide what borrowing actually costs month to month: the cushion after a due date, which credit checks leave marks, how installment credit is structured, and the price of borrowed money itself.
Grace Period
A grace period is a short window after the due date — often a few days to two weeks — during which a payment can arrive without triggering a late fee. Length varies by lender and state, and some personal loans have none.
Hard Inquiry
A hard inquiry is a credit check recorded on your report when you formally apply for credit, and it can trim a few points from your score temporarily. Accepting a specific loan offer usually triggers one. Comparing preliminary personal loan offers, by contrast, typically relies on soft inquiries that cost nothing.
Installment Loan
An installment loan is credit issued as one lump sum and repaid in fixed scheduled payments over a set term. A personal loan from $500 to $5,000 is the classic example. The structure contrasts with revolving credit, where the balance can rise and fall indefinitely as you spend and repay.
Interest
Interest is the price a lender charges for the use of its money, calculated as a percentage of your outstanding balance. Each monthly payment covers the interest accrued since the last one, with the remainder reducing principal.
J – L
Late fee through loan agreement name the parties and paperwork of lending: the penalty for a missed due date, the company that funds the money, the group of such companies behind a matching site, and the contract binding it all together.
Late Fee
A late fee is a fixed charge or small percentage added when a payment misses its due date and any grace period. Typical fees on a small personal loan run $15 to $40, and state law often caps them.
Lender
A lender is the licensed company that actually funds a loan, sets its terms, and collects repayment. Makwa Loans is not one — it is a connector that introduces borrowers to lenders. Shoppers researching loans like makwa finance are really comparing the lender networks behind each matching brand.
Lending Network
A lending network is the group of lenders that receives requests from a matching service and responds with offers. The makwa lending network focuses on personal loan amounts from $500 to $5,000. Borrowers searching for makwa finance loans — or typing a makawa loan query — reach this same network either way.
Loan Agreement
The loan agreement is the binding contract stating the amount, APR, fees, payment schedule, and what happens if payments stop. Nothing a website or advertisement says overrides it. Reading a makwa loan agreement before e-signing is the highest-value five minutes in the borrowing process.
M – O
Matching service through origination fee cover the mechanics of getting from request to deposit: who introduces you to lenders, when the loan formally ends, what you pay monthly, and the charges that can be deducted on the way in.
Matching Service
A matching service shares one borrower request with many lenders and returns the offers, charging the consumer nothing. Makwa Loans — often typed as makawa loan by searchers, and sometimes as makwa financial — operates this way: it arranges a makwa loan but never funds it, so final terms always come from the lender.
Maturity Date
The maturity date is the scheduled final payment date, when a fully amortized balance reaches zero and the account closes. A twelve-month personal loan signed in March matures the following March.
Monthly Payment
The monthly payment is the fixed amount due each month, sized so the loan retires exactly on schedule. On a $2,000 makwa loan offer at an estimated 24% APR over twelve months, the payment is roughly $189. Lenders must show this figure before you commit to anything.
Non-Sufficient Funds (NSF) Fee
An NSF fee is charged when an automatic payment bounces because the account lacked the money — and your bank may charge its own fee on top. Two charges for one missed payment make NSF events expensive, so align the due date with your paycheck.
Origination Fee
An origination fee is a one-time charge, commonly 1% to 8% of the amount borrowed, deducted from the deposit before it reaches your account. A $2,000 personal loan with a 5% fee delivers $1,900. The fee is included in APR, which is why APR beats the interest rate for comparisons.
P – R
Prepayment penalty through repayment term govern how a personal loan ends: whether finishing early costs anything, which part of the balance is actually yours, how income gets proven, how an old loan becomes a new one, and how long repayment runs.
Prepayment Penalty
A prepayment penalty is a charge some lenders impose for paying a loan off ahead of schedule, compensating them for interest they will not collect. Penalties are rare on small personal loans and banned in several states. Confirm the "prepayment" line in your agreement reads "none" before signing.
Principal
Principal is the amount you actually borrowed — the base on which interest is calculated. Each payment splits between interest and principal, and only the principal portion shrinks your debt.
Proof of Income
Proof of income is documentation showing you earn enough to repay: recent pay stubs, bank statements, tax forms, or a secure instant link to your bank account. Gig and self-employed workers usually qualify through deposits rather than stubs.
Refinancing
Refinancing means replacing an existing loan with a new one, ideally at a lower rate or more workable payment. The new personal loan pays off the old balance, and you repay the new lender going forward. Refinancing a makwa loan makes sense once your credit has improved.
Repayment Term
The repayment term is the length of time scheduled to retire the loan — commonly three to twenty-four months for small amounts. Shorter terms cost less in total interest but demand bigger payments. Picking the term your budget genuinely supports matters more than minimizing either number.
S – T
Secured loan through Truth in Lending disclosure describe protection — for the lender through collateral, and for you through inquiry rules, transparent interest math, and the federal paperwork that forces every cost into the open before signatures happen.
Secured Loan
A secured loan is backed by collateral the lender can take if you default — a car title is the common example at small amounts. Security lowers the lender's risk, which can mean easier approval or a lower rate.
Simple Interest
Simple interest is calculated only on the outstanding principal, never on unpaid interest. Most small personal loan contracts use it, which is why paying early always saves money.
Soft Inquiry
A soft inquiry is a credit check that never affects your score and is invisible to other lenders. Submitting a makwa loan request begins with one, which is what makes comparing preliminary offers free. Hard inquiries enter the picture only when you accept a specific lender's offer.
Term
Term is shorthand for the repayment period of a loan, stated in months. A "twelve-month term" means twelve scheduled payments. The term interacts directly with cost: at the same APR, a longer term lowers each personal loan payment while raising the total interest paid.
Truth in Lending Disclosure
The Truth in Lending disclosure is a federally required statement showing the APR, finance charge, amount financed, and total of payments in one standard format. Every legitimate lender provides it before you sign.
U – Z
Underwriting through verification close the alphabet with the lender's side of the desk: how a request is actually judged, what borrowing without collateral means, how some rates can move, and how lenders confirm you are who the application says.
Underwriting
Underwriting is the lender's process of evaluating a request — credit history, income, DTI, and banking behavior — and deciding whether to offer a loan and at what price. For a makwa loan request, underwriting happens at each individual lender, which is why offers on the same profile can differ.
Unsecured Loan
An unsecured loan requires no collateral; the lender relies on your promise to repay and your credit profile. Most personal loan offers between $500 and $5,000 are unsecured. Rates run somewhat higher than secured equivalents because the lender carries more of the risk.
Variable Interest Rate
A variable interest rate can move up or down over the life of a loan, usually tracking a market index. Credit cards commonly use variable rates; small installment loans rarely do. A fixed-rate personal loan protects your budget from rate changes you cannot control.
Verification
Verification is the step where a lender confirms your identity, income, and bank account before releasing funds — by document upload, instant bank linking, or occasionally a phone call. Quick, accurate verification is the difference between same-day funding and a three-day wait.