Loans Jargon Buster

Loans jargon and terms explained by Larry the Loan Broker

  • APR – or annual percentage rate – helps you compare the real cost of borrowing. Lenders have to quote the APR when they advertise a loan or borrowing rate. The APR must also include any charges made by the lender.
  • Representative APR – is the average annual percentage rate that we will offer to at least 51% of our customers and is based on factors including the size of the loan.
  • Fixed rate – your repayments stay the same for the entire loan.
  • Interest -When you borrow money, the lender will make a charge – known as interest. For example, if you borrow £1000 at an interest rate of 10% for one year, you will have to pay £1100.
  • BACS (Bankers’ Automated Clearing Services) – This is the electronic processing of financial transactions. BACS Direct Debits and BACS Direct Credits are made using the BACS system. BACS payments take three working days to clear: they are entered into the system on the first day, processed on the second day, and cleared on the third day.
  • Cash Advance – is a service provided by most credit card and charge card issuers. The service allows cardholders to withdraw cash, either through an ATM or over the counter at a bank or other financial agency, up to a certain limit. For a credit card, this will be the credit limit or some percentage of it.
  • Credit Check – is run on your credit report by a financial institution when you want to take out one of their financial products.
  • Credit Reference Agency (CRA) – is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves. In some cases, the servicers of the underlying debt are also given ratings.
  • Credit score – is a number representing the creditworthiness of a person or the likelihood that person will pay his or her debts.
  • Debit Card – Card attached to your bank account, which takes payment directly from the cash in your account rather than on credit.
  • Emergency Cash Loans – If you’ve had an unexpected bill or you are short of cash an emergency loan is a facility that will allow you to borrow a certain amount and repay it when you get paid or at an agreed date. Emergency cash loans may be obtained from a bank, credit union or short term lending company.
  • Fast Loans -These are loans you have for up to a month to bridge the gap up until your next pay date.
  • Faster Payments -This means that when you have signed your loan agreement and your loan is deposited that you will have the funds in your bank account on the same day. If your bank doesn’t accept Faster Payments then funds can take up to 3 working days to clear into your account. You can check to see if your bank accepts Faster Payments at www.canipayfaster.co.uk.
  • Fraud Prevention Agency (FPAs) – collect, maintain and share information on known and suspected fraudulent activity. Although you have applied to us, we will check our own records and we will also contact a Credit Reference Agency (CRA) to get information on your credit behaviour with other organisations. This will help us make the best possible assessment of your overall situation before we make a decision.
  • Guarantor – A person that signs a guarantee with a lender and promises to repay a your loan if you can’t, normally a family member.
  • Guarantor Loans – With a guarantor loan there is no need to be credit scored. A guarantor loan works by using someone else as a way of security to allow the borrower to be accepted for the loan.
  • Interest – A fixed charge for borrowing money, usually a percentage of the amount borrowed.
  • Loan Agreement – is a binding contract which regulates the terms and conditions of the loan and is a legal document between the creditor (the company lending) and the debtor (the customer). It shows the key information of the amount of credit you are taking, the duration of the agreement, the total amount payable and the APR.
  • Outstanding – When you borrow money from a lender and have not yet made a payment, this is the outstanding balance.
  • Payday Advance – a small loan that is repayable on your next payday.
  • Payday Loans – short terms loans that you payback on your next pay date.
  • Personal Loans – where you borrow a sum of money from a financial institution i.e. a bank, building society or other financial service provider for personal use. Individuals who take out personal loans can use the money how they wish.
  • Secured Loans – This is a loan where property or other assets are used as security against the loan. Due to this the interest on secured loans is usually lower than other types of loans.
  • Short Term Loans – A loan scheduled to be repaid in less than a year.
  • Transaction – This refers to the movement of money. For example, when you pay money into or take money out of a bank account. It can also refer to a purchase in the case of a transaction with a shop.
  • Unsecured Loans – are thereby not backed by any security and the risk for the lender increases. Therefore, unsecured loans have higher rates of interest as compared to secured loans.
  • Log Book Loans – are secured against the log book of your car and you give the logbook to the lender when borrowing the loan. Once the loan is repaid in full you get the log book back.