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Personal Loans Glossary

Additional Finance Charges

Penalty paid by customer for late payments of installment.

Amortization

The repayment of a loan or debt in regular installments. Each installment is split into two components- one of principal repayment and the other of interest.

Compound Interest

Interest charged or paid on the principal as well as the accumulated interest. This is unlike simple interest which is charged/paid only on the principal.

Deduction Against Salary (DAS)

An arrangement where a salaried employee allows to the employer to deduct the personal loan installment from the salary and pay it to the lender. This is done with the mutual consent of the employer and the lender.  

Direct Sales Associate (DSA)

A DSA is an agent of the lender. A DSA will take care of sales & servicing of the customer before the personal loan is granted. DSAs are authorized by the loan providers and paid commissions based on every loan that they disburse.

Equated Monthaly Installment (EMI)

A fixed payment made by a borrower to a lender on a specified date every month.The benefit of a personal loan EMI for you is that you would know precisely how much money you will need to pay toward the loan each month, making your personal budgeting easier.

Field Credit Investigation (FCI)

The investigation done by an outside agency on behalf of the lender to authenticate the identity of the client and confirm his place of residence and office address.  

Internal Rate of Return (IRR)

The rate of return which the lender would earn on the loan transaction.  

Lease

A contract by which the owner of an asset lets it out for use to another for a specified time on payment of a specified amount called rental.

Lending Rate

The interest charged by the financier on the amount financed. Typically personal loan interest rates can be charged in the range of 15%-20%.

Loan Tenure

The duration for which a loan has been provided.

Processing Charges

Service charge collected by the lender, it is collected upfront before the loan is paid out.

NEAR (Net Effective Annualized Rate)

The net rate paid by the client after taking into account all discounts, other charges paid, subventions and advance installments. It is the rate to be used for evaluation of two or more offers.  

Post Dated Cheques (PDC)

Cheques issued in favour of the financier for repayment of loan.  

Returns

Yields or profits made in a financial transaction.

Risk

Chance or danger of a loss of capital and/or interest

Standing Instructions

Instructions to your bank to debit a fixed amount from your account on a given date, to pay the EMI  to your lender.

Statutory Charges

Charges like stamp duty, service tax etc imposed by the government.