Glossary Of Consumer Finance Terms

A guide to many of the terms used in the consumer finance market.


Acceptance Rate – The percentage of customers that are successful when applying for a loan or credit card. 66% or more applicants must be offered the advertised rate know as the Typical APR (See ‘Typical APR’ below).

Annual Percentage Rate (APR) – The rate of interest payable annually on the loan or credit card balance. This allows potential customers to compare lenders. Under the Consumer Credit Act Lenders are legally required to disclose their APR.

Arrears – Missed payments on a loan, credit card, mortgage or most kinds of debt are termed Arrears. The borrower has a legally binding obligation to settle any arrears as soon as possible.

Arrangement Fee – Generally for the administration costs of setting up a mortgage.


Base Rate – The interest rate set by the Bank of England. This is the rate charged to banks for lending from the Bank of England. The base rate and how it may change in the future has a direct influence on the interest rate a bank may charge the consumer on a loan or mortgage.

Business Loans – A loan specifically for a business and generally based on the businesses past and likely future performance.


Car Loan – A loan specifically for the purchase of a car.

Consumer Credit Association (CCA) – Represents most businesses in the consumer credit industry. Government, local authorities, financial bodies, finance focused media and consumer groups are all members. Members sign a constitution and must follow a code of practice and business conduct.

County Court Judgement (CCJ) – A CCJ can be issued by a County Court to an individual that has failed to settle outstanding debts. A CCJ will adversely affect the credit record of an individual and can possibly result in them being refused credit. A CCJ will stay on a credit record for 6 years. It is possible to avoid this major negative stain on your credit record by settling the CCJ in full within one month of receiving it, in this case no details of the CCJ will be stored on your credit record.

Credit Crunch – A situation where Lenders cut back on their lending simultaneously usually down to a shared fear that borrowers will not be able to repay their debts.

Credit File – Information stored by credit reference agencies, such as Experian, Equifax and CallCredit, on an individuals credit and borrowing arrangements. The Credit File is checked when Lenders consider a credit application.

Credit Reference Agencies – Companies that keep records of individuals credit and borrowing arrangements, amounts owed, with who and payments made, including any defaults, CCJ’s, arrears etc.

Credit Search – The general search undertaken by the Lender with the credit reference agencies.


Debt C0nsolidation – The transfer of multiple debts to a single debt via a loan or credit card.

Default – When a regular debt repayment is missed. A default will be recorded on an individuals credit record and will adversely affect the chance of success of any future credit applications.

Data Protection Act – An act of Parliament in 1998 and the main legislation that governs the use of personal data in the UK. Lenders are not allowed to share an individuals personal data directly with other institutions or companies.


Early Redemption Charge – A fee charged by Lenders if a borrower pays back their debt before the debts agreed term is reached.

Equity – The value a property has beyond any loan, mortgage or other debt held upon it. The amount of money an individual will receive if they sold their property and repaid the debt on the property in full.


Financial Conduct Authority (FCA) – The government appointed institution responsible for regulating the finance market.

First Charge – The mortgage on a property. A Lender who has first charge on a property will take priority for repayment of their mortgage or loan from the funds available after the sale of a property.

Fixed Rate – An interest rate that will not change.


Homeowner Loan – Also commonly known as a secured loan. A Homeowner Loan is only available to individuals that own their own home. The loan will be secured against the value of the property usually on the form of a second charge on the property.


Instalment Loans – Multiple loan repayments spread over a period. Depending on the Lender their may be flexibility in the repayment amounts and schedule.


Joint Application – A loan or other credit application made by a couple rather than a single person e.g. husband and wife.


Lender – The company providing the loan or mortgage.

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

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

Loan To Value (LTV) – Generally associated with a mortgage and taking the form of a percentage. This is the loan amount in relation to the full value of the property. e.g. an individual may be offered a mortgage of 90% LTV on a property worth £100,000. In this case the offer would be £90,000.


Monthly Repayments – The monthly payments made to settle a loan including any interest.

Mortgage – A loan taken specifically to finance the purchase of a property in most cases a home. The property is offered as security to the Lender.


Online Loans – Although most loans are available online. The Internet has allowed for the development of technology that allows for the faster processing of a loan application than traditional methods. In some cases a loan application, agreement and the funds appearing in your account can take as little as 15 minutes or less.


Payday Loan – A short term cash advance of up to 31 days which is repayable on your next payday. Payday loans come with a high APR because of the shorter term of the loan.

Payment Protection Insurance (PPI) – Insurance to cover debt repayments should the borrower be unable to maintain their repayments for any number of reasons including redundancy, illness or an accident.

Personal Loans – A general loan for any purpose and in varying amounts that can be provided to an individual based up on their credit history.

Price For Risk – Lenders now have a range of interest rates that are chosen based on an individuals credit score. An individual with a poor credit score is deemed High Risk and will likely be offered a higher interest rate as the Lender factors in the possibility of them defaulting on their repayments. Conversely an individual with a high credit score and a good credit history is considered Low Risk and will be offered a lower rate of interest.


Qualifying Criteria – The eligibility requirements required by the Lender. The most basic criteria required to qualify for a loan in the UK are; permanent UK residency, age 18 or over and a regular income. Many Lenders may also include extra lending conditions.


Regulated – financial ‘products’ that are overseen by the Financial Conduct Authority (FCA). Lenders must follow a code of conduct and individuals are protected by the Financial Services Compensation Scheme (FSCS).

Repayment Schedule – The time period over which a loan will be repaid and the details of the loan repayment amounts.


Second Charge – A second loan, in addition to any other loan, that is secured against an individuals property.

Secured Loan – Also commonly known as a Homeownr Loan. A secured loan is only available to to homeowners. The loan amount is secured against the value of the property. The Lender has the right to repossess your property should you fail to maintain the loan repayments.

Shared Ownership – An agreement in which an individual owns only a percentage of the property. The remaining percentage is owned by a third party often a housing association. The individual may have a mortgage on the part of the property they own and pay rent on the part of the property they do not own.


Total Amount Repayable – The total amount of the loan plus the interest and any applicable fees.

Typical APR – The advertised interest rate that is offered to a minimum of 66% of successful loan applicants.


Underwriting – The process of verifying data and approving a loan.

Unregulated – Not covered and regulated by the Financial Conduct Authority (FCA).

Unsecured Loan – A loan that does not require collateral and is provided on ‘good faith’. Under the belief by the Lender that you can repay the loan based on your credit score, credit history and financial standing amongst other factors.


Variable Rate – An interest rate that will change during the loan repayment period.

The Basics of Installment Loans

Nowadays home equity loans are becoming an incredibly popular way of raising money. They are useful for the people who are struggling to combat the effects of the worldwide recession. People always think that property is the best way to invest your money. Especially, during the circumstances like recession if you think that money invested in property will be helpful in living an easier and better life you can prefer to get the best deal on home equity loan. However, with a large number of companies, banks and other financial institutes cropping up in the country it becomes difficult to find the finest home equity loan rates.

The exceptional part of home equity loan rates is that they are fixed, stable, low as well as possess tax-deductable features. This can prove as the most cheaper and affordable option in the long run to any individual. Basically, a personal installment loans system allows a person to borrow a large sum of cash and can pay it back over a period of time with monthly payments. They are somewhat similar to payday loans but the only thing that makes these loans different is that you can pay the loan back in installments.

There are times when you are scared of your poor credit. Indeed, a good credit score is known to be the lifeline of any individual. But in any case if you have bad credit then too your loan will be approved at the faster rate. This procedure can also be named as quick loans bad credit. For people who cannot wait for weeks and require instant solution can definitely opt for home equity loans rates, which will not increase your financial burden in any way. This loan is extremely helpful in consolidating several debts of an individual. It can certainly transform various debts into a single one which is one of the most exceptional things about these loans.

The biggest advantage of home equity loan rates is that it can save ample amount of money. It is a straightforward process that gives you lot of benefits. Moreover, any person is qualified to get benefits of these loans. Borrowers can get relatively large loans with this type of loans. Are you thinking from where to find a company which gives you a loan? Then surf the web immediately. It is certainly the exceptional way to find the lowest home equity loan. You can apply online and complete the process in an efficient way.

However, if you are not certain about the topics like best personal loans then search for a relevant site that will provide you with insightful details about these loans. These guides will help you in taking the correct decision. Getting the best deal on the loans can be difficult if you are unaware about the basics of loans. For better knowledge surf the site now. Procure all the details so that you do not regret on your decision. So what are you waiting for? Surf the site now.

UK Loans Guide – Channelising Your Rising Budget in a Productive Mmanner

Every unknown road needs a milestone to configure where it leads. Every loan type in UK requires a guide to steer through the loans market. The vastness of loans in UK is exhaustive. Loan borrowing in UK is growing by the day. Loan process has been considerably simplified leading to opening of new possibilities for money borrowing.

There are a few golden rules which stand by every loan in UK. First and foremost is figuring out the loan amount. It is like the preliminary step while borrowing loans in UK. Taking loan amount in accordance of your financial status is the key to making loan process a smooth sailing one.

Loans application

Loan application is the first step in the loans process. It gathers and record information about prospective loans borrowers. While applying for loans in UK you might require showing some documents. Documents would confirm your status as a commendable loan borrower.

Loan documents

Documentation is dependent on the loan type you apply for. For a secured loan or any homeowner loan, you property papers would be checked. Secured loans require you to pledge your property as a guarantee. Similarly, payday loans would require you to show that you have a current, valid bank account with regular income. Different loan are meant to cater to different needs and different circumstances. You would need to research more for your particular loan type.

Loan repayment

Every loan means repayment. Monthly payment for your loan is very subjective and usually dependent on the loan amount. Loan market in UK guarantees a veritable opportunity of getting a loan. While loan borrowing, it is fundamental to plan your monthly budget in order to include the monthly payments.

Loan repayment term

Loan repayment term is the time in which you repay the loan. A lot of your money can be saved if you plan your loan term. A longer loan term for any UK resident would mean that you are paying more on your loan in the form of interest. So, extending loan term is not always a great option. However, extending loan term as in remortgage could mean prolonging the term in order to organize your budget and releasing equity to start a new business, planning a vacation or making home improvements.

Loan interest rate

The phrase ‘lower interest rate’ attracts borrowers to loan type. Interest rate advertised with loans is in the form of APR. APR is the annual percentage rate. APR will show you how much the loan costs and is calculated by using the standard formula. It is expressed as a yearly rate of interest and includes interest, certain additional costs like insurance and fees associated with the loans. APR aid to compare loan types so that UK residents can espouse interest rates that suit their circumstances.

Credit history

Credit history is fundamental in the context of loans borrowing in UK. Knowing your credit history would help you getting fair dealing while applying for a loan. Poor credit history implies higher rate of interest for your loan. Credit history contains information like payment history from revolving accounts, mortgages and previous loans. It also contains inquiries from business when you have requested a loan, public records and collection information. The more you know about your credit history the more confident you will be while applying for loans.

Credit score

Another related term is credit score. Credit score is record of your credit history at a particular point of time. Higher the credit score the more likely you are to get complimentary interest rates. Credit score are divisible into grades which is applicable to all loans in UK.

A + credit score (580-620 or more) means very few or no credit problems since last two years and no delayed mortgage payments.
A – credit score (560-580) few mortgage problem over two years and one or two, thirty day late payments.

B credit score (550-560) connotes a fall in the credit reports.

C credit score (535-550) lots of late repayments. This means late mortgage payment that is in the 60- or 90-day range. This also includes bankruptcy or foreclosure that had been discharged or settled in the last 12 months.

D credit score (500-535) implies lots of missed payments.

Any credit score ranging from grade B to D would imply that you need to apply for bad credit loans. Though bad credit loan type is frequently available in UK they entail higher rate of interest. Credit management services can help you to repair credit. You can start by paying all your pending dues. Seeking professional help is recommended for credit repair and would provide UK residents with loans they require.

Loans in UK do not mean solving temporary financial crisis. It is a way to further your dream of improving your financial well being. Loans do mean a financial limitation but if used wisely can proffer financial freedom. The market for loans in UK is huge and the options are numerous. But the trick is to find loans that will manoeuver your finances in a more constructive fashion.