Financial Glossary
Demystifying the lending protocol. Understand the core metrics algorithms use to determine your liquidity access.
Annual Percentage Rate (APR)
The Annual Percentage Rate (APR) represents the true yearly cost of borrowing funds, expressed as a percentage. Unlike the standard interest rate, the APR includes both the interest expense and any fees or additional costs associated with the transaction.
Origination Fee
An origination fee is an upfront charge assessed by a lender for processing a new loan application. It covers the costs of underwriting, evaluating the borrower's credit, and funding the loan.
Debt-to-Income (DTI) Ratio
The Debt-to-Income (DTI) ratio is a personal finance measure that compares an individual's gross monthly income to their total monthly debt payments. It is one of the most critical metrics used by underwriting algorithms.
Hard Inquiry (Hard Pull)
A hard inquiry occurs when a financial institution requests your full credit report from a major credit bureau to make a formal lending decision. This action is recorded on your credit file.
Principal
The principal is the original sum of money borrowed in a loan, or the remaining amount owed, excluding interest and fees.
FICO Score
A FICO score is a three-digit number, ranging from 300 to 850, that assesses a consumer's creditworthiness based on data from credit bureaus. It is the industry standard for risk evaluation.
Unsecured Loan
An unsecured loan is a loan that is issued and supported only by the borrower's creditworthiness, rather than by any type of collateral (like a house or car).
Amortization
Amortization is the process of spreading out a loan into a series of fixed payments over time. You pay off both the principal and the interest in a scheduled structure.
Prepayment Penalty
A prepayment penalty is a fee charged by a lender if you pay off your loan before the end of its official term.
Co-signer
A co-signer is a secondary individual who legally signs a loan agreement alongside the primary borrower, guaranteeing to pay the debt if the primary borrower defaults.