This page is a plain-language glossary of every loan term you will encounter on InstaMoney and in personal lending in India. Terms include EMI, NBFC, CIBIL score, processing fee, principal, interest rate, APR, prepayment, tenure, auto-debit mandate, KYC, and more.
Why This Dictionary Exists
Loan documents and financial apps use specific terms that are not always explained. Understanding these terms helps you compare loan offers accurately, know your rights, and make decisions based on the full picture rather than just the headline number.
Every term below is defined in plain language. If a term in your InstaMoney loan offer or agreement is not listed here, contact support at cs@instamoney.app.
A
Annual Percentage Rate (APR)
The true annual cost of a loan expressed as a percentage, including both the interest rate and all other fees (processing fee, etc.). APR gives a more accurate picture of the loan cost than the headline interest rate alone. A loan with a 24% interest rate and a 3% processing fee has a higher APR than one with only the 24% rate.
Amortisation
The process of paying off a loan through regular scheduled payments over time. Each EMI payment amortises (reduces) the outstanding loan balance. An amortisation schedule shows how each payment is split between principal and interest over the loan’s life.
Auto-Debit Mandate (e-NACH or UPI Mandate)
An authorisation you give to your lender to automatically deduct your monthly EMI from your bank account on the due date. On InstaMoney, this is set up during the application process. It ensures your EMI is never missed due to forgetfulness.
C
CIBIL Score
A 3-digit number between 300 and 900 calculated by TransUnion CIBIL that reflects your creditworthiness. A score of 750 or above is excellent. A score of 0 or -1 means no credit history, not a bad score. See instamoney.app/what-is-cibil for the full guide.
Collateral
An asset pledged to a lender to secure a loan. If the borrower defaults, the lender can claim the collateral. InstaMoney loans are unsecured, meaning no collateral is required.
Credit Bureau
An organisation that collects and maintains credit histories for individuals and businesses. The four credit bureaus in India are TransUnion CIBIL, Experian, Equifax, and CRIF High Mark. Lenders report your repayment behaviour to these bureaus, which use it to calculate your credit score.
Credit Enquiry (Hard vs Soft)
A hard enquiry occurs when a lender formally checks your CIBIL score as part of a loan application. It slightly reduces your score temporarily. A soft enquiry occurs when you check your own score. Soft enquiries have no impact on your score.
D
Default
Failure to repay a loan according to the agreed terms. A default is reported to credit bureaus, significantly damages your CIBIL score, and may trigger recovery proceedings by the lender. Under RBI rules, abusive recovery practices are prohibited.
Debt-to-Income Ratio (DTI)
The percentage of your monthly income that goes toward debt repayment. Total monthly EMIs divided by total monthly take-home income. Most lenders prefer a DTI below 40% to 50%. A high DTI reduces your chance of approval for additional loans.
E
EMI (Equated Monthly Installment)
The fixed monthly payment that repays a loan over its tenure. Each EMI includes a principal component and an interest component. On InstaMoney loans, EMIs are deducted automatically via auto-debit mandate on the due date each month.
e-NACH
Electronic National Automated Clearing House. A digital mandate system used in India to authorise recurring auto-debit payments. When you set up EMI repayment on InstaMoney, an e-NACH mandate is registered against your bank account.
F
Foreclosure
Repaying the entire outstanding loan amount before the end of the agreed tenure. Also called prepayment. Foreclosure reduces total interest cost. Whether a foreclosure fee applies depends on the NBFC partner and is stated in your loan agreement.
Fair Practices Code (FPC)
A set of guidelines issued by the RBI that all banks and NBFCs must follow when lending. Key protections include transparent fee disclosure, ethical recovery practices, and accessible grievance redressal. Lenders who violate the Fair Practices Code can be reported to the RBI.
G
Grievance Redressal Officer (GRO)
A designated officer at every RBI-regulated lender responsible for handling borrower complaints. RBI requires all NBFCs to have an accessible GRO. InstaMoney’s grievance process is at instamoney.app/grievance.
Guarantor
A third party who agrees to repay a borrower’s loan if the borrower defaults. InstaMoney personal loans do not require a guarantor.
I
Interest Rate (Annual)
The percentage of the outstanding loan principal charged as interest per year. On InstaMoney, the annual interest rate is 24% to 48%. The actual rate offered depends on your CIBIL score and income profile.
K
Key Fact Statement (KFS)
A mandatory document that the RBI requires all digital lenders to provide before loan acceptance. The KFS summarises the loan amount, interest rate, all fees, EMI amount, and total repayment. If you have not been shown a KFS, you are not required to accept the loan.
KYC (Know Your Customer)
The identity verification process required by RBI for all lending. On InstaMoney, KYC is completed by uploading your Aadhaar card and PAN card. Digital KYC is fully valid and legally equivalent to in-person verification.
N
NBFC (Non-Banking Financial Company)
A financial institution regulated by the RBI that can provide loans and financial services without holding a full banking licence. InstaMoney connects borrowers to NBFCs including Innofin Solutions and Aeroflex Finance. Your loan agreement is issued by the NBFC, not by InstaMoney directly.
P
Principal
The original loan amount borrowed, not including any interest or fees. When you take a Rs. 30,000 loan, Rs. 30,000 is the principal. Each EMI payment reduces the outstanding principal balance.
Processing Fee
A one-time charge by the NBFC lender, deducted from the loan amount at the time of disbursal. On InstaMoney, the processing fee is 0% to 6% of the loan amount. For example, a 3% processing fee on a Rs. 30,000 loan means Rs. 900 is deducted and you receive Rs. 29,100.
Prepayment
Repaying the full outstanding loan amount before the tenure ends. Prepayment reduces total interest cost. Whether a prepayment penalty applies is stated in your loan agreement.
R
Registration Fee
A non-refundable fee charged at the time of application on InstaMoney, up to Rs. 399. This is charged regardless of whether the loan is approved. It covers the cost of processing the application.
Reducing Balance Method
An interest calculation method where interest is charged only on the outstanding loan balance rather than the original principal. As you repay the principal each month, the interest amount decreases. This is the method used by InstaMoney’s NBFC partners.
T
Tenure
The total duration of the loan in months. On InstaMoney, personal loan tenures range from 3 to 12 months. A shorter tenure means higher monthly EMI but lower total interest. A longer tenure means lower monthly EMI but higher total interest.
U
Unsecured Loan
A loan that does not require collateral. The lender relies entirely on the borrower’s income and creditworthiness. InstaMoney personal loans are unsecured: no property, gold, or guarantor is needed.