APR stands for Annual Percentage Rate. The lower the APR rate is, means the monthly repayments will be lower. In simple terms, the APR is a measure of how much a given loan or mortgage will cost you in interest per calendar year.
The term "Bad Credit" is used by companies for clients whom are behind with payments on other loans or finance. Some companies may charge a higher rate of interest to people who fall into this category.
Bankrupt is a term for those people who have got into severe debt and cannot make repayments to outstanding commitments. Once you have declared yourself bankrupt the courts will make you sell your assets and that amount raised will be given to your creditors.
Credit Rating show a history of your repayments, outstanding balances and commitments. All of this information will be calculated towards your credit rating.
Creditor is someone or company that you owe money to. This could be a loan, credit card company or mortgage lender.
Default is a term used when someone has not made financial payments according to their contract of repayments, i.e. a loan, mobile phone bill etc. The creditor would have made several attempts of contact but failed and therefore. This will show on your credit report so other companies can see it to help calculate your Credit Rating.
The word Equity is used to describe the amount of property which you own and do not owe money on, i.e. a mortgage lender. Example if your house is worth £200,000 and your mortgage outstanding balance is £120,000 your equity is £80,000.
The initials FSA stand for Financial Services Authority. This is an independent non-governmental body that protects the consumer.
Insurance is a product to insure an event happening. It can be if you have an accident in your car, or if you are ill and cannot continue work or you can insure your life.
Interest is the amount of money paid if you borrow an amount off a loan or credit card company. This is how they make their money. Alternatively interest can paid on savings that you have.
IVA ( Individual Voluntary Arrangement) This is used by people who have a large amount of unsecured debt (normally over £15,000) and cannot make all the repayments. An IVA is a contractual arrangement with creditors and can be as flexible as an individual's own circumstances; they can therefore be based on capital, income, third party payments or a combination of these.
Mortgage is a loan secured on a property and the common way of purchasing your home. There are several types of mortgage but the most common one is a repayment mortgage. With this you pay off the loan and the interest occurred. If you fail to make payments the mortgage lender may repossess your property and sell it to recover their money.
Payment protection is an insurance which may cover your loan repayments, for loss of work either by redundancy or through illness.
Personal Loan (Unsecured Loan) is a loan offered which is available to people who don't have to be homeowners . There is no property secured on the loan, sometimes the interest rates are higher because of the lack of security therefore this is a higher risk to the lender.
Secured Loan is a loan for home owners with a mortgage. It is secured on a property like a mortgage so your home is at risk if repayments are not kept.
Unsecured Loan (Personal Loan)is a loan offered which is available to people who don’t have to be homeowners. There is no property secured on the loan, sometimes the interest rates are higher because of the lack of security therefore this is a higher risk to the lender.
