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It is quite easy to get confused by financial terms, even quite basic ones,
as they are not terms that often crop up in our day-to-day lives. We have composed
a list of phrases that you are likely to come across in your dealings with loans-
whether you are going through your terms and conditions or merely browsing through
advertising material.
| Application |
a statement of personal details and
financial information used to determine your suitability for a loan. |
| APR |
the abbreviation APR stands for 'Annual
Percentage Rate' and refers to the amount of interest that you will be expected
to pay on a sum borrowed. This interest will be calculated as a yearly percentage
of the sum that you have borrowed. APR includes any additional charges such as
broker's fees. |
| Collateral |
collateral is the term used to describe
property or assets assured as security for a loan. Collateral will be at risk
if repayments are not kept up. Also referred to as security. |
| Credit agreement |
this is the agreement you will need
to sign before you can receive a loan. It will outline the various terms and conditions
of the loan and is legally binding. |
| Credit reference agency |
a credit reference agency is a private
company that keeps credit records for individuals across the country. Credit reference
agencies are used by loan providers in order to assess applicants. |
| Debt management plan |
such a plan will enable you to make
lower repayments to your creditors over a longer period of time. |
| Fixed interest rate |
an interest rate which will remain continuous
throughout the term of the loan. This type of rate is often initially higher than
its variable counterpart but will not be subject to wild fluctuations. |
| Over-repayments |
this is the term used to refer to the
practice of making payments over those outlined by a loan repayment plan. |
| Secured |
a secured loan is a type of loan where
the borrower is required to put up property as security against the loan. That
property is then at risk if loan repayments are not kept up as agreed. |
| Security |
see collateral. |
| Term |
the length of time over which you agree
to make the full repayment for your loan. |
| Under-repayments |
this is the term used to refer to the
practice of making payments under those outlined by a loan repayment plan. |
| Underwriting |
the process of checking out an application
and approving a loan. |
| Unsecured |
an unsecured loan is a type of loan
provided without need for proof of owned property. The APR on this type of loan
is typically higher, and it will be granted based on the client's credit history
and financial situation. |
| Variable interest rate |
this type of rate is often initially
lower than a fixed interest rate but is subject to change and fluctuations. |
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