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As a relative newcomer to the cheap short-term loans scene, you may be a little flummoxed by the jargon you encounter. For example, several important terms such as personal loan, representative APR, secured loan, debt consolidation, loan payment deferment, credit reference agencies, car loan, APR, credit rating, and so forth will be bandied about.
Other terms you’re likely to encounter include APRC, bridging loans, business loans, consumer credit act, early repayment penalties, interest rates, payment protection insurance, loan calculators, instant payday loans, loan quotes, et al. These cheap short-term loans instant payday loans terms are important to understand, and it behooves you to take a few moments to learn more about them.
Personal Loan: personal loans are unsecured loans that are provided by a lender to a borrower based on your individual credit score and personal situation. Typically, personal loans are offered at higher rates of interest, and over shorter repayment time frames. Cheap short-term loans are personal loans.
Representative APR: some 51% of UK borrowers will be offered a representative APR when they apply for a short-term loan. APR is the annual percentage rate charged on the principal. Be advised that the RAPR (representative APR) varies from one short-term lender to the next.
Secured Loan: cheap short-term loans are unsecured loans. Secured loans are safeguarded by assets such as immovable property (real estate) which can be requisitioned by the loan provider if you default on the payment.
Debt Consolidation: when you decide to consolidate debts, you add them all together into a bigger loan which is repayable at a lower rate of interest. A debt consolidation loan is a popular option for people who find it difficult to repay the credit card debt at high rates of interest.
Loan Payment Deferment: occasionally, a lender may give a borrower a break, known as a loan payment deferment before the loan repayments commence.
Credit Reference Agencies: the moment you apply for a loan, you will have a credit history – whether it is developed or not. Credit reference agencies maintain records of your credit history and they construct a credit profile which is used by lenders to evaluate your credibility.
Car Loans: as its namesake suggests, a car loan is a line of credit issued for the express purposes of purchasing a vehicle. Car loans are repaid monthly, and are based on a pre-stated rate and payment plan.
APR: the APR you pay is the annual percentage rate of interest on borrowed money. The higher the APR the worse the loan terms and conditions. The APR typically includes any extra charges with the loan such as processing fees, and comparative shopping.
Credit Rating: your credit rating is a points-based system that is utilized by cheap short-term loans providers, banks and other financial institutions to evaluate your creditworthiness. This indicates how much of a risk you are to the lender. The credit rating is available in the form of a credit report. Public records are used to gauge your credit worthiness, and determine whether you have filed for bankruptcy.
Credit Reference Agencies: credit reference agencies (CRAs) aggregate consumer profiles and credit reports and release that information to various companies such as Equifax, Experian, TransUnion etc. Many lenders will utilize the services of credit reference agencies for loans, mortgages and other lines of credit. Customers may be entitled to request a copy of their credit reports, oftentimes at a nominal fee.
APRC: An APRC is an acronym for annual percentage rate of charge. It functions similar to an APR, however it is used for mortgages.
Bridging Loans: instant payday loans are effectively bridging loans to tide you over from one payment period to the next. Bridging loans are short-term loans designed to help you out of a bind. These loans are typically more expensive than traditional loans, given the urgency and swiftness with which they are provided.
Business Loans: business loans are used for purchasing assets. They can also be used for any business-related expenses such as paying suppliers, rental, maintenance, etc. Business loans typically require security.
Consumer Credit Act: this act was legislated in 1974 and it regulates all the information that instant payday loans companies must provide in their credit agreements. It also requires that details of the computation of APRs are provided.
Early Repayment Penalties: sometimes, a lender will charge a borrower a fee for repaying a loan ahead of time. This is known as an early repayment penalty.
Interest Rates: the interest rate is the percentage of interest that must be paid on a loan. This interest-rate can either be a variable rate (changeable), or fixed. Once a lender and a borrower sign a contract, the interest rate is ironclad.
Payment Protection Insurance: payment protection insurance is known as PPI. It is an insurance policy against an inability to repay a loan. Things like loss of employment, death, injury etc. can hamper your ability to make good on your loan repayments.
Loan Calculator: a loan calculator is a resource provided by a loan company to help you to gauge the interest, repayment timeframe, and related expenses for taking out a loan. This allows you to compare options between different loan providers.
Instant Payday Loans: an instant payday loan is precisely that – rapid access to a line of credit, upon approval, typically up to £1,000 provided you are gainfully employed and meet the loan provider’s credit requirements.
Loan Quotes: this is a quotation regarding the interest and repayment plan for a loan you are interested in.
These are some of the many terms and conditions, and industry-related jargon you are likely to find in the UK loans industry.