Glossary - L

The fee charged for delinquent payment on an installment loan, usually expressed as a percentage of the loan balance or payment. Also, a penalty imposed by a card issuer against a cardholder's account for failing to make minimum payments.

A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent).

An individual, financial institution, or other entity that lends money with the expectation that the money will be returned with interest.

Legal claim against a property. Once the property is sold, the lien holder is then paid the amount that is owed.

A pre-approved loan authorization with a specific borrowing limit based on creditworthiness. A line of credit allows borrowers to obtain a number of loans without re-applying each time as long as the total of borrowed funds does not exceed the credit limit.

The ratio of the loan principal (amount borrowed) to the appraised value (selling price). For example, on a $100,000 home, with a mortgage loan principal of $80,000, the loan-to-value ratio is 80 percent. The LTV will affect the types of programs available to the borrower; generally, the lower the LTV, the more favorable the program terms offered by lenders.

The written agreement between a borrower and a lender in which the terms and conditions of the loan are established.

A fee charged by a lender to make a loan (in addition to the interest charged to the borrower).

A contractual agreement in a loan that allows the borrower or lender to permanently change one or more of the terms of the original contract

The net amount of funds a financial institution disburses under the terms of a loan, and which the borrower then owes.

A check payable by, at, or through a financial institution in the same check processing region as the location of the branch of the depository institution. The depository institution is the institution into which the check was deposited. As of February 27, 2010, the Federal Reserve consolidated its checking processing centers into one processing center. Therefore, all checks are now considered local.