Loan Glossary

A fee charged by some lenders if the borrower pays off the loan early (fully or through large extra payments). More common on commercial loans and hard money loans.

The original amount borrowed on a loan, or the remaining balance owed. Principal decreases as the borrower makes payments. Interest is calculated on the outstanding principal balance.

An individual or non-bank entity that provides loans outside of traditional banking channels. Private lenders typically charge higher rates but can move faster and offer more flexible terms.

A legal document signed by the borrower promising to repay the loan under specific terms including the interest rate, repayment schedule, and consequences of default.