The A – Z of Loans – starting with adverse credit loans
If you’re not sure whether there’s any difference between an adverse credit secured loan and a poor credit secured loan, this handy guide to loan terminology will help you.
When you’ve reached the bottom of our loan terms list, if there are still terms you’re not sure about, contact one of our advisers for more information – whether on poor credit loans or any other type of secured or unsecured loan that interests you.
From adverse credit to valuations – a loan glossary
Adverse (or poor) credit
Adverse credit is a term relating to your credit rating. If you have adverse credit you may have more difficulty obtaining a loan from high street lenders e.g. missed mortgage payments, defaults, CCJs
Annual Percentage rate (APR)
This is the total cost of the loan, including the interest charges and product fees, shown as a percentage. The APR is an industry standard calculation and enables direct comparison of loans.
Arrangement / Lender fee
Some lenders charge an arrangement fee which can normally be paid up front or added to the loan.
Arrears
The term “in arrears” is used to describe a loan or mortgage amount owed by borrowers if they have failed to keep up their monthly payments.
Bridging loan / bridging finance
This is a short-term loan to help you buy a new property before you sell your existing one or before your mortgage or loan has been finalised.
County Court Judgment (CCJ)
If you have a CCJ, it means that a judge has ruled against you in court. If you pay off the debt, the CCJ is satisfied and a note is placed on your records to show this.
Credit Reference Agencies
These are organisations licensed under the Consumer Credit Act 1974 to hold information about people’s credit history. Most lenders refer to these agencies to help them make a decision on your application.
Credit Scoring
The system that some lenders use to help them decide whether they can lend money to you. Your answers on your application are scored and your score result decides whether you are accepted or declined.
Credit Search
A check the lender makes with a specialist company to find out if you have any County Court Judgments, or a record of missed loan or credit card payments.
Debt Consolidation
This is the process of combining your outstanding debts e.g. credit cards, car loan, overdraft etc into one loan.
Debt Management
Debt management is a financial agreement a company organises for you with your creditors, allowing you to lower your monthly payments in accordance with government legislation.
Default
If you miss a payment to one of your creditors then you could be in default, this is recorded on your credit rating.
Early Repayment Charge
If your loan or mortgage is repaid early, a charge is usually payable. The amount will depend upon the terms of the agreement.
Equity
If your house is worth more than the mortgage on it, the difference is known as equity.
Financial Ombudsman
This is an independent professional body which helps to settle disputes between consumers and firms such as lenders.
Financial Services Authority
This is the regulatory authority for the UK financial services industry.
Guarantor
A guarantor will guarantee that any debt will be repaid, this method is helpful if you are unable to obtain the necessary loan or mortgage in your own right. It is often used by parents to assist their children getting onto the property ladder.
IFA
This is an Independent Financial Advisor
Loan consolidation
The bringing together of all loan debt into one payment which can reduce your monthly outgoings.
Loan to Value
This is the amount of the mortgage shown as a percentage of the property value.
Negative Equity
This happens when the value of the outstanding mortgage is greater than the value of the property.
Ombudsman
See Financial Ombudsman
Remortgage
This is the process of moving your mortgage without moving home often to reduce monthly repayments and / or change the type of mortgage product e.g. to a fixed rate.
Second Charge
Secured loans are often called second charges as they are the second charge against your property after a mortgage
Secured loan
A secured loan is secured against your property
Term
This is the timescale over which the loan is to be repaid and will be part of the loan offer.
Transfer of Equity
This happens when you add or remove a party to/from a mortgage or other secured loan.
Unsecured loan
This is a loan that does not require security, such as a charge on a property – as a result the interest rate is usually higher than for a secured loan.
Valuation
A valuation is required by the lender provided by a surveyor who determines the value of the property.
