Credit and Loan Terms

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Annual Fee

Back

The fee a credit card company charges for the use of their credit card.

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Credit Limit

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The maximum amount of money the lender is willing to loan to an applicant.

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Finance Charge

Back

The total cost of using credit including interest and fees.

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Origination Fee

Back

The charge for setting up a loan, often associated with home loans.

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Loan Term

Back

The length of time you have to pay the loan. The longer the loan, the lower your monthly payment and the greater the interest paid.

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Grace Period

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The length of time that the lender charges no interest on money borrowed when you pay off your balance in full each month.

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Annual Percentage Rate (APR)

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The cost of the loan each year expressed as a percentage. All lenders are required by law to calculate APR the same way.

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Introductory Rate

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A lower interest rate offered by credit card companies, usually for a short period of time, to entice you to sign up for credit with them. Eventually, the introductory rate expires and a new increased rate takes effect.

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Principal:

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the original amount of a loan; the total amount borrowed before interest

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Interest:

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the additional cost a lender charges for borrowing their money​​​​​​​