Jargon Buster

A

APR

(APR) Annual Percentage Rate is a way to reduce confusion for potential borrowers giving a standard to compare percentage costs of a loan. Apart from the interest cost APR can also include other charges such as processing fees and insurance (for private Mortgages).

B

(BACS) Direct Credit

Is a secure, reliable and simple payment service enabling organisations to make electronic payment transfer directly into a building society or bank account. There is a three day transaction period and the details required are: account number, the branch sort code and the name of the account.

C

Cash Advance

Cash Advances are viewed as a last resort for borrowing money, carrying a higher interest rate than a credit card. Cash can be withdrawn directly from a finance agency, over the counter at the bank or at an ATM. Credit scores dictate the amount that can be borrowed.

Credit Check

Prospective lenders determine if a person is creditworthy with a credit check through detailed analysis from a credit agency or bureau, using payment history from past loans and personal details including previous and current addresses to rate a person. Some people with a poor rating can still obtain a loan but at a much higher interest rate.

(CRA) Credit Reference Agency

Is a source of information for lenders about prospective borrowers who have made a loan application. Helping loan companies make a decision based on the information garnered. Credit Reference Agencies collate information about people including loan history and compile a file on a person to be used when required.

Credit Score

determines whether or not a person will qualify for a loan or how high the interest rate will be adjusted. A credit score is made up of three digits mathematically generated algorithmically and designed to predict risk.

D

Debit Card

Debit cards resemble credit cards and are used to pay for goods or withdraw funds from a bank account where the cash exists without using credit. Some debit cards can be loaded with prepayment or electronic transfer and are not linked to an account.

E

Emergency Cash Loans

Designed for those situations where cash is needed fast usually from an unexpected situation like a family emergency. Emergency cash loans can be obtained from the bank or a loan company offering short term loans or payday loans where you agree to pay back the loan on the next salary day.

F

Fast Loans

Fast Loans is another term used for payday loans and are offered until the next payday sometimes this can be extended and carry a higher interest rate.

Faster Payments

Once a loan is agreed a set fee can be paid to speed up the process of the cash loan delivery usually obtaining the loan amount in the same day. You can log on to a website - www.canipayfaster.co.uk and check if your bank provides the faster payment service.

(FPA) Fraud Prevention Agencies

Help detect fraudulent behaviour such as fraudulent applications collecting information from credit reference agencies. More and more companies are turning to fraud prevention agencies as part of their fraud management solutions as online fraud grows each year.

Fixed rate

Fixed rate refers to a loan or mortgage that has a predetermined rate that cannot be changed for the duration of the loan.

G

Guarantor

Guarantors are often a close friend or family member of a person applying for a loan who is not yet credible enough to qualify for a loan on their own. If the person defaults the guarantor is legally obligated to pay off the loan or make the payments agreed.

Guarantor Loans

A guarantor loan is for people with a low credit rating predominantly young people who ask an older credible family member to stand guarantor.

H

I

Interest

Interest is the way a loan company or bank receives payment for lending money, it is a percentage rate added to the loan amount.

J K

L

Loan Agreement

Is a legal document between the lender (company offering a cash amount plus interest) and the debtor (the person taking out the loan) the document will state the amount to be paid back and the amount of time plus the staged payment amounts and APR, also the terms and conditions if the person should default on the loan.

M N

O

Outstanding

A term referring to the amount of money still owed on a loan.

P

Payday Advances

A payday advance is a small loan that is repayable on your next payday.

Payday Loans

Payday loans are an emergency loan taken out with the agreement that it will be paid back within a month or on the next payday.

Personal Loan

Personal loans are a fixed interest rate loan over 12 months and up to 72 months depending if they are secured or unsecured and used for home improvement, a holiday, car or anything the borrower desires.

Q

R

Representative APR

Representative APR is usually the Annual Percentage Rate that is advertised by a loan company based on a year’s average and must offer that rate to at least 51% of the lenders resulting from that advertisement.

S

Secured Loans

Secured Loans have a lower interest rate because they are considered less of a risk to the Loan Company or bank because assets or property are secured against the loan which can be seized if the borrower defaults.

Short Term Loans

A loan that is taken out over a period of 12 months.

T

Transaction

Transaction is the act of engaging in the exchange of money both by receiving or giving over to a bank, shop or person.

U

Unsecured Loans

Unsecured loans carry the highest risk for a lender because no assets or property can be recovered in the advent that the loan is defaulted, these loans are usually for smaller amounts and have a higher rate of interest.

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