Glossary of Terms
Annual Percentage Rate (APR)
APR or the Annual Percentage Rate is the interest rate charge on
your loan. This takes into account the interest payable over
the term of the loan as well as any other related charges or
fees.
Application Fee
Some banks may charge an application fee to process your loan
application. Paying this fee does not guarantee you will
be approval, and will
not be refunded should your application be rejected.
Asset
An asset is any property with monetary value (i.e. real estate,
equipment, savings, investments).
Balance
This is the amount of money left in your bank account after all
deposits, withdrawals, interest and bank charges have been accounted
for.
Bad Credit
If you’ve defaulted on a loan or missed a credit card payment
you may be flagged as a bad credit risk by financial companies. This
makes it difficult to get approved for loans and often means you
will pay more interest on any loan you are able to take out.
Cash Advance
This is an instant loan obtained from a credit card account, with
interest charged from the date of the advance until it is repaid.
There may also be a transaction fee based on the amount of the
advance.
Cheque
A written order to transfer money from a bank account.
County Court Judgement (CCJ)
County Court Judgement is a judgement made against a person or
company for debt in the county court. If a CCJ is paid in full
within 30
days of the date of the judgement it won’t reflect in the credit
register. CCJs are catalogued and kept for 6 years with the Registry
Trust.
Credit Check
This is done by a lender when you apply for a loan. The result
of a credit check will help the lender determine how much
of a risk
you are to loan money to and will affect amount you can borrow
and the interest rate you are offered.
Credit Rating
This is an independent evaluation published by a credit rating
agency or service of your ability to pay interest and repay
principal on
borrowed money.
Debt
A legal obligation to deliver a product, service, or cash.
Deposit
The money you put into a bank account.
Equity
This is the value of your home minus outstanding mortgage amounts
and other loans. Equity can be converted into cash through companies
willing to offer loans secured against it.
Financial Statement
A written record provided by the bank which details your financial
situation. It often includes a record of all the money you have
had come into you account, and all the money you have paid out.
Income
The total amount of money you receive from all sources, including
wages, bonuses, commissions, government or retirement benefits,
compensation claims interest and dividends on all investments.
Net Income
The total amount of your income after any expenses and taxes you
pay are subtracted.
Overdrawn
You are considered overdrawn on your account if you withdraw more
money than it currently holds. You are likely to incur some charge
relating to the amount you are overdrawn, unless there was a prior
arrangement with your bank.
Overdraft
This is an amount by which your bank account can be overdrawn.
You will be charged a set fee for the provision of an overdraft
facility,
usually calculated as a fairly high percentage of the total overdraft
value.
Variable Interest Rate
This type of rate varies depending on changes in a particular measure
or index. Variable interest rates in the UK are computed from the
Bank of England Base Rate.
