Glossary Of Consumer Finance Terms

A information to lots of the phrases used within the client finance market.


Acceptance Rate – The share of consumers which are profitable when making use of for a loan or credit card. 66% or extra candidates should be provided the marketed charge know because the Typical APR (See ‘Typical APR’ beneath).

Annual Percentage Rate (APR) – The charge of curiosity payable yearly on the loan or credit card steadiness. This permits potential clients to check lenders. Under the Consumer Credit Act Lenders are legally required to reveal their APR.

Arrears – Missed funds on a loan, credit card, mortgage or most sorts of debt are termed Arrears. The borrower has a legally binding obligation to settle any arrears as quickly as doable.

Arrangement Fee – Generally for the administration prices of organising a mortgage.


Base Rate – The rate of interest set by the Bank of England. This is the speed charged to banks for lending from the Bank of England. The base charge and the way it might change sooner or later has a direct affect on the rate of interest a financial institution might cost the buyer on a loan or mortgage.

Business Loans – A loan particularly for a enterprise and customarily based mostly on the companies previous and sure future efficiency.


Car Loan – A loan particularly for the acquisition of a automotive.

Consumer Credit Association (CCA) – Represents most companies within the client credit score trade. Government, native authorities, monetary our bodies, finance centered media and client teams are all members. Members signal a structure and should observe a code of observe and enterprise conduct.

County Court Judgement (CCJ) – A CCJ will be issued by a County Court to a person that has didn’t settle excellent money owed. A CCJ will adversely have an effect on the credit score file of a person and might probably end in them being refused credit score. A CCJ will keep on a credit score file for six years. It is feasible to keep away from this main adverse stain in your credit score file by settling the CCJ in full inside one month of receiving it, on this case no particulars of the CCJ will likely be saved in your credit score file.

Credit Crunch – A scenario the place Lenders in the reduction of on their lending concurrently often right down to a shared worry that debtors will be unable to repay their money owed.

Credit File – Information saved by credit score reference businesses, comparable to Experian, Equifax and NameCredit, on an people credit score and borrowing preparations. The Credit File is checked when Lenders contemplate a credit score software.

Credit Reference Agencies – Companies that hold data of people credit score and borrowing preparations, quantities owed, with who and funds made, together with any defaults, CCJ’s, arrears and so forth.

Credit Search – The normal search undertaken by the Lender with the credit score reference businesses.


Debt C0nsolidation – The switch of a number of money owed to a single debt through a loan or credit card.

Default – When a daily debt reimbursement is missed. A default will likely be recorded on an people credit score file and can adversely have an effect on the prospect of success of any future credit score purposes.

Data Protection Act – An act of Parliament in 1998 and the primary laws that governs the usage of private information within the UK. Lenders will not be allowed to share an people private information immediately with different establishments or corporations.


Early Redemption Charge – A charge charged by Lenders if a borrower pays again their debt earlier than the money owed agreed time period is reached.

Equity – The worth a property has past any loan, mortgage or different debt held upon it. The amount of cash a person will obtain in the event that they offered their property and repaid the debt on the property in full.


Financial Conduct Authority (FCA) – The authorities appointed establishment liable for regulating the finance market.

First Charge – The mortgage on a property. A Lender who has first cost on a property will take precedence for reimbursement of their mortgage or loan from the funds accessible after the sale of a property.

Fixed Rate – An rate of interest that won’t change.


Homeowner Loan – Also generally often known as a secured loan. A Homeowner Loan is barely accessible to people that personal their very own dwelling. The loan will likely be secured towards the worth of the property often on the type of a second cost on the property.


Instalment Loans – Multiple loan repayments unfold over a interval. Depending on the Lender their could also be flexibility within the reimbursement quantities and schedule.


Joint Application – A loan or different credit score software made by a pair moderately than a single individual e.g. husband and spouse.


Lender – The firm offering the loan or mortgage.

Loan Purpose – The function for which the loan was acquired.

Loan Term – The time period over which the loan will likely be repaid.

Loan To Value (LTV) – Generally related to a mortgage and taking the type of a share. This is the loan quantity in relation to the complete worth of the property. e.g. a person could also be provided a mortgage of 90% LTV on a property value £100,000. In this case the provide could be £90,000.


Monthly Repayments – The month-to-month funds made to settle a loan together with any curiosity.

Mortgage – A loan taken particularly to finance the acquisition of a property generally a house. The property is obtainable as safety to the Lender.


Online Loans – Although most loans can be found on-line. The Internet has allowed for the event of expertise that enables for the sooner processing of a loan software than conventional strategies. In some circumstances a loan software, settlement and the funds showing in your account can take as little as quarter-hour or much less.


Payday Loan – A brief time period money advance of as much as 31 days which is repayable in your subsequent payday. Payday loans include a excessive APR due to the shorter time period of the loan.

Payment Protection Insurance (PPI) – Insurance to cowl debt repayments ought to the borrower be unable to take care of their repayments for any variety of causes together with redundancy, sickness or an accident.

Personal Loans – A normal loan for any function and in various quantities that may be offered to a person based mostly up on their credit score historical past.

Price For Risk – Lenders now have a spread of rates of interest which are chosen based mostly on an people credit score rating. An particular person with a poor credit score rating is deemed High Risk and can doubtless be provided the next rate of interest because the Lender components in the opportunity of them defaulting on their repayments. Conversely a person with a excessive credit score rating and credit score historical past is taken into account Low Risk and will likely be provided a decrease charge of curiosity.


Qualifying Criteria – The eligibility necessities required by the Lender. The most elementary standards required to qualify for a loan within the UK are; everlasting UK residency, age 18 or over and a daily revenue. Many Lenders can also embrace additional lending situations.


Regulated – monetary ‘merchandise’ which are overseen by the Financial Conduct Authority (FCA). Lenders should observe a code of conduct and people are protected by the Financial Services Compensation Scheme (FSCS).

Repayment Schedule – The time interval over which a loan will likely be repaid and the main points of the loan reimbursement quantities.


Second Charge – A second loan, along with another loan, that’s secured towards an people property.

Secured Loan – Also generally often known as a Homeownr Loan. A secured loan is barely accessible to to householders. The loan quantity is secured towards the worth of the property. The Lender has the appropriate to repossess your property do you have to fail to take care of the loan repayments.

Shared Ownership – An settlement through which a person owns solely a share of the property. The remaining share is owned by a 3rd social gathering typically a housing affiliation. The particular person might have a mortgage on the a part of the property they personal and pay lease on the a part of the property they don’t personal.


Total Amount Repayable – The whole quantity of the loan plus the curiosity and any relevant charges.

Typical APR – The marketed rate of interest that’s provided to a minimal of 66% of profitable loan candidates.


Underwriting – The strategy of verifying information and approving a loan.

Unregulated – Not coated and controlled by the Financial Conduct Authority (FCA).

Unsecured Loan – A loan that doesn’t require collateral and is offered on ‘good religion’. Under the assumption by the Lender that you may repay the loan based mostly in your credit score rating, credit score historical past and monetary standing amongst different components.


Variable Rate – An rate of interest that can change throughout the loan reimbursement interval.

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