What does the term “disbursement” refer to in the context of personal loans?

In the context of personal loans, the term “disbursement” specifically refers to the payment made to third parties, such as the borrower or other entities involved in the loan process. This includes the actual distribution of loan funds after the approval process has been completed.

Disbursement is a critical step in the lending process, as it signifies that the lender has completed all necessary evaluations and has decided to provide the borrower with the agreed-upon loan amount. Other processes involved in obtaining a loan, such as reviewing the initial loan application, preparing loan documentation, and submitting loan requests, occur prior to final disbursement. Therefore, they do not encapsulate what disbursement truly represents in this context.