Disbursement

Full definition

Disbursement is the final step in the lending process - the moment when approved loan funds are transferred to the borrower. Understanding disbursement timing helps borrowers plan for when money will actually be available. Disbursement methods: Direct-to-borrower ACH: Most common for personal loans. The lender initiates an ACH transfer to the bank account provided during the application. Funds arrive in 1-3 business days. Wire transfer: Some lenders offer same-day wire for a fee. Check: Traditional lenders and some credit unions still issue physical checks. Direct-to-creditor: For debt consolidation loans, some lenders offer to pay creditors directly rather than disbursing to the borrower. Disbursement timing variables: Business day processing - ACH transfers only process on business days. A Friday approval typically means Monday disbursement. Origination fee deduction - if the lender charges an origination fee (1%-8% of the loan amount), it is typically deducted from the disbursement. You receive the net amount. Verification holds - some lenders hold disbursement for a 3-day cooling-off period (right of rescission) under state law for certain loan types. Tracking disbursement: After signing the loan agreement, the lender provides a disbursement confirmation with an expected date. You can also check the lender's online portal. Once the ACH is initiated, most banks show the pending deposit 1 business day before it clears. If you do not receive funds: Contact the lender's support team with your loan reference number. Confirm the bank account details you provided are correct (routing number and account number errors are a common disbursement problem). Incorrect account information can delay or misdirect funds.

• Loan Proceeds
• Origination fee
• ACH transfer