Financial Jargon Buster

The Money Advice Service carried out a study in 2014 which found that failure to understand financial jargon costs the average person £428 a year. As a responsible lender, we would like to help you avoid such losses! Here’s a selection of commonly used financial terms you may find useful:

APR (Annual Percentage Rate):

You can use it to compare different credit and loan offers. The APR takes into account not just the interest on the loan but also other charges you have to pay, for example, any arrangement fee. All lenders have to tell you what their APR is before you sign an agreement. It will vary from lender to lender. Remember, we do not have any hidden charges or arrangement fees on our loans!

Balance:

This is the money you have left to pay on a loan.

Cheque cashing:

Cheques can take a while to clear at the bank, so if you want to get the money straight away you can use a cheque cashing service. AT H&T we offer this service, you exchange your cheque for money minus a small fee.

Credit score or credit rating:

This is the score given to you by the credit reference agency depending on your personal credit history. If you have always kept up to date with your payments and paid off your loans you’re likely to have a good credit rating. When borrowing money from us, we will carry out a credit check on you to look at your credit history.

CPA (Continuous Payment Authority):

CPA is an agreement we have with you to take payment directly from your debit card in the event that a direct debit payment fails or should you wish to make additional payments.

Direct debit:

An instruction to your bank to pay your installments automatically at an agreed date, this ensures you don’t forget and incur bank charges.

Default:

This is when you do not fulfill your obligations in terms of repayment. This can mean missing a payment, paying late or not at all. There are consequences such as losing your asset if it’s a secured loan or in the case of unsecured loans this can mean late payment fees, downgrading of your credit rating and possibly being taken to court. If you’re struggling to pay you should always contact us to discuss your options.

FCA (Financial Conduct Authority):

The FCA is a financial regulatory body that operates independently of the UK government. The FCA regulates financial firms providing services to consumers and maintains the integrity of the UK’s financial markets. It focuses on the regulation of conduct by both retail and wholesale financial services firms. To do this the FCA regulate the conduct of more than 70,000 businesses – and for many of these they also consider whether they meet prudential standards that reduce the potential harm to the industry and consumers if they fail.

Interest rate:

When you borrow money, we will charge you an amount for doing so. The interest rate is a percentage added to the amount that is outstanding, and is charged either daily, weekly or annually. For example if you borrow £100 at an interest rate of 10% for a year, you will pay £110 at the end of the year.

Net and Gross Pay:

Gross pay is the amount you earn before deductions such as tax, National Insurance etc. have been taken out. Net pay is also known as your take home pay as it’s what you have left after all deductions have been made.

On Credit:

If you buy something ‘on credit’, a sofa or car for example, you will enter into a consumer credit agreement with the supplier which means you can take your goods and pay for them over a period of time. The provider will usually charge interest for this service.

Pawn / Pledge:

This is an item used as security in a secured loan, also known as a pawnbroking loan or an asset-based loan.

Secured loan:

A loan paid out against something of value which you own. The loan is secured against an asset such as jewellery, electronics, cars or houses. This is also known as a pawnbroking loan or an asset-based loan.

Unsecured loan:

This can also be known as a Personal Loan. An agreed amount is borrowed and then repaid across a fixed period of time. We will add an interest rate charge for providing this facility.