Loan Terminology

1. Application Fee (Cuota de aplicación)
Some lenders may charge an application fee for their alternative loans. This is a fee charged to process the application. It is usually not taken from the principal of the loan and must be paid when you apply for the loan, regardless of the loan amount.
2. Capitalization (Capitalización)
Adding interest that has accrued onto the loan principal.Subsequent interest then begins to accrue on the new principal.
3. Co-signer (Co-firmante)
This is a person who signs the promissory note with the borrower and promises to repay the loan if the borrower does not. Both the co-signer and the borrower are responsible to repay the loan. Some loans require a co-signer and some don't.
4. Default
Being in default is defined differently for different loans.Basically, it means being delinquent in repaying a student loan more than a certain number of days or failure to comply with any of the other terms of the promissory note. Generally missing one payment does not mean the borrower is in default.


5. Deferment (plazo)
This means that the payments on the principal of the loan will be delayed for a specified time. However, the interest must bepaid or it is added to the principal. This means the loan will cost the borrower more in the long run, but it may make the loan easier for the borrower to repay.
6. Disbursement (pago)
This is when and how you get the money that you've borrowed. Generally the money is sent to the college and then given to you. Some colleges can transfer the money directly into the student's bank account.
7.Forbearance (Prórroga)
An arrangement to postpone or reduce a borrower's monthly payment amount for a limited and specified amount of time, or to extend the repayment period. The borrower is charged interest during the forbearance.

8. Guarantee Fee (Garantía de pago)
These fees are used to guarantee that lenders are repaid even if the lender can't collect on the loan due to default, death, ordisability.
The guarantee fee is often taken from the principal before it is given to the borrower. This means the borrower will not be given all the money that is borrowed, but must still repay the total amount as if he or she had been given all the money.
9. Interest Rate (Tasa de interés)
This is a percentage of the loan amount that you're charged for borrowing money. It is a re-occurring feethat you're required to repay, in addition to the principal. The interest rate is always recorded in the promissory note.
Sometimes, the interest rate remains the same throughout the life of the loan until it is all repaid. Other times, the interest rate will change every year, quarter (three months), monthly, or weekly based on some financial variable such as the interest rate of Federal Treasurynotes.
Some lenders will lower the interest rate when the borrower makes a certain number of payments on time, has a co-signer for the loan, and so forth.
10. Loan Consolidation (Préstamo de consolidación)
Several loans are combined into one larger loan. The payment pattern and interest rate may change on the consolidated loans. The total payment may be smaller and the length of time formaking repayments may be increased. This means the loan will cost the borrower more in the long run, but it may make the loan easier for the borrower to repay on a monthly basis.
11. Maximum Time to Repay (Tiempo máximo para pagar)
The promissory note will state the maximum time that the borrower can take to repay the entire loan. Read the promissory note carefully. The maximum loan repayment can betied to:
• When the student leaves college
• When the money was borrowed
12. Minimum Payment (pago mínimo)
This is the smallest amount of payment that will be acceptable to the lender. Even if the loan is small, the borrower must make the minimum payment each month until the loan has been fully repaid.
13. Origination Fee (Origen de cuota)
Processing the loan application and...