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Loan Jargon

• Adjustment date - The date on which the interest rate changes on a variable rate loan UK.
• Annual percentage rate - Also known as APR, this is a percentile figure that expresses the entirety of charges that will be made upon a UK loan, including the interest rate and any other supplementary fees.
• APR - See 'annual percentage rate'.
• Balance outstanding - The amount of a loan that remains to be repaid at any particular point in time.
• Bank of England base rate - The rate of interest set by the Bank of England that is followed by almost all lenders and will influence variable rate loans UK.
• Capital - The original sum of money borrowed, not inclusive of any interest that might be charged upon it.
• Collateral - Property or other assets used by a lender in order to secure a loan.
• Co-signer - Someone who admits joint liability for a loan.
• Credit agencies - Companies used by UK loan providers who provide individual assessments of loan applicants in the form of a credit report.
• Credit history - This refers to a client's history of dealing with credit. If you have things like mortgage arrears, debts or county court judgements then these will all contribute to weakening your credit history. A history of prompt credit repayments will go to help building a good credit history and you will be looked upon as a good risk by a potential lender.
• Creditor - A business or organisation to which capital is owed, in other words, a lender.
• Debt - Money that is owed to a lender.
• Early redemption penalty - This is a fee that is sometimes imposed if a loan is paid back earlier than previously agreed. This charge is made in order to cover any losses made from unpaid interest.
• Eligibility guidelines - Criteria that you must fulfil in order to apply for a particular product.
• Fixed rate loan - A UK loan which carries with it a specific interest rate for a fixed length of time.
• Interest rate - A charge that borrowers owe for the service of being lent money. It is charged as a percentage of the total amount of capital owed and accounts for the majority of the APR.
• Oustanding balance - See 'balance outstanding'.
• Principal - The amount of capital that a borrower owes on a loan. In other words, the amount on which interest charges are calculated.
• Quotation - A written illustration of the costs involved in taking out a loan and in its repayment.
• Redemption penalty - See 'early redemption penalty'.
• Term - The length over which you agree to pay back your loan.
• Security - Property or other equity used as collateral in order to guarantee a loan.
• Unsecured loan - A UK loan that is not tied to any collateral or security.
• Variable interest rate - Interest rate that is subject to variation in line with economic changes.