Jargon Free Loans

The accrued interest is the total interest that has been added to your debt so far. This is typically up to the date of your last payment and will update every time you make payment.

If you have debts that are less than £5000 that you can’t afford to pay, then the county court (the court that issues county court judgements – CCJs) take a single payment from you and splits it between your creditors. This stops creditors taking further action and avoids any additional interest being accrued.

The Annual Equivalent Rate (AER) tells you the amount of interest you will earn on savings over a year. The higher the AER, the more interest your savings will make you.

The Annual Percentage Rate (APR) tells you how much interest you would pay on a loan or debt over a year. All lenders are required to display the APR rate on advertisements, and it must also include any additional fees or charges. Generally, lower APR means a less expensive loan.

As soon as you miss a payment on an account, the account is in arrears. All overdue money is in arrears.

A court issues an attachment of earnings order. They instruct your employer to deduct an amount directly from your wages to pay off a debt. They send the amount to the court, which pays it to the lender.

This is the interest rate set by the Bank of England.

Lenders use your credit rating to assess how big of a risk lending you money is. A good credit score means you have been paying your way regularly, whereas a poor credit rating is usually due to missed payments or defaulted debts.

These are the agencies that hold all the information about your credit history, including your credit rating. Lenders use these agencies to perform a credit check on you.

People typically go bankrupt when they can’t afford to pay off their debts. A creditor can also make you go bankrupt. Personal bankruptcy can involve your assets being sold to pay off your outstanding debts.

FCA stands for the Financial Conduct Authority. They regulate all legitimate lenders.

This is the document that details out the terms of the loan. When you and the lender both sign it you are making a promise to each other. The lender will provide you with the money, and you will repay it according to the terms of the agreement.

An unsecured loan is not secured against a specific asset. While these loans are unsecured, a lender can still take legal action against you if you fail to repay the amount borrowed.

Hopefully, these definitions will help you to navigate financial websites with a little more ease. If there are any words or terms you’re unsure about, please don’t hesitate to ask, we’re always happy to help.