Short-term lending has its own vocabulary, and none of it is decoration: every term below changes what a loan costs or what can happen to you. The definitions are plain English, with the numbers a borrower actually meets, and where a rule varies by state, the definition says so. Bookmark the page; the same words recur on contracts, disclosures, and collection letters, and knowing which one governs is worth real money.
Costs
These six lines are where every dollar a lender earns shows up.
APR (annual percentage rate). The cost of credit expressed as a yearly rate, including interest and mandatory fees. A $75 fee on $500 for 14 days works out to about 391% APR, and federal TILA rules require lenders to disclose it before you sign.
Finance charge. The total dollar cost of a loan: interest plus required fees. On a one-payday product it is usually just the fee; on an installment loan it accumulates across every month of the term.
Per-$100 fee. The flat charge per $100 borrowed, typically $10 to $30 depending on the state. At 15%, a $500 loan costs $75 for two weeks.
Origination fee. A one-time setup charge, common on installment and personal loans. It is usually deducted from the proceeds or folded into the balance, so you pay interest on it too.
Prepayment penalty. A charge for retiring a loan ahead of schedule. Most one-payday products carry none, but some installment contracts do; read for the clause before you sign anything.
Total of payments. The sum of every payment due if you pay on schedule. It is the number that exposes the real price of a long, high-APR installment loan.
Mechanics
These terms describe how the money moves, and what happens when it does not.
ACH authorization. Your written permission for the lender to debit your bank account electronically. It is how repayments are collected, it can be revoked in writing, and revoking it does not erase the underlying debt.
Rollover (or renewal). Paying the fee on the due date to push the full principal back two weeks. It is the mechanism behind most payday debt spirals, and some states cap the number of renewals or ban them outright.
Extended payment plan (EPP). A right in many states to convert the balance into several installments at no extra fee, provided you ask the lender before the due date.
Balloon payment. One large final payment covering all remaining principal at once. A one-payday loan is a single balloon; some installment schedules end with a smaller version of one.
Closed-end credit. A loan for a fixed amount, on a fixed schedule, with an end date. Payday and installment loans are closed-end; credit cards are revolving, which is the opposite.
Underwriting. The lender’s process for deciding whether to lend. For short-term products it leans on income, bank history, and specialty-bureau records rather than a full review of your mainstream credit file.
Soft check vs. hard inquiry. A soft check reviews records without touching your credit score; a hard inquiry can shave a few points. Payday lenders rarely hard-pull; larger installment and personal loans often do.
Data
Most short-term lenders judge you by these files, not by your FICO score.
Teletrack. A specialty credit bureau focused on subprime and short-term lending. Many payday lenders check Teletrack instead of, or alongside, the three major credit bureaus.
Clarity Services. A specialty bureau that tracks short-term and installment loan history for lenders. You can request a copy of your file and dispute errors, the same as with any bureau.
FactorTrust. A specialty bureau covering nonprime borrowers, now part of TransUnion. It supplies alternative data on past small-dollar borrowing that mainstream credit files simply lack.
FICO. The company behind the score most lenders quote, built from Equifax, Experian, and TransUnion data. Because most payday lenders do not report there, a current payday loan usually does not move it.
Market
These terms decide which rules apply to a lender, and where.
Credit Access Business (CAB). A licensed broker that arranges a loan from a third-party lender and charges its own separate fee, a structure common in Texas payday products.
Payday Alternative Loan (PAL). A $200 to $2,000 loan from a federal credit union, capped at 28% APR with terms of one to twelve months, issued by an NCUA-insured institution.
Tribal charter (sovereign lender). A lender operating under the law of a federally recognized tribe rather than a state. State rate caps generally do not apply; federal law, including TILA and the Military Lending Act, still does.
Usury cap. A state’s legal ceiling on interest or fees. Where the ceiling makes payday pricing impossible, licensed payday lending does not operate; thirteen states sit in that group.
Military Lending Act (MLA). The federal law that caps most credit to covered servicemembers and their families at 36% APR, with rules that apply regardless of the lender’s charter.
Where to check a term in context
If a term on your contract is missing here, our FAQ (/faq/) answers the questions borrowers ask most often, and the rates-and-fees page (/rates-and-fees/) shows how each cost line looks on a real quote. When a definition and your contract disagree, the contract governs, and the disagreement is worth raising with your state regulator.