The jargon buster: The A-Z of Personal loans

Money 2017-4-4

It can be very easy to get lost in a maze of technical terms when looking to take out a loan. Our A-Z jargon-busting glossary aims to help guide you through the terminology.

We’re not a bank and we hope it shows. We don’t want to speak in complicated jargon any more than you want to hear it. But for those words and phrases that are impossible to avoid when it comes to finance, we’ve created our Jargon Buster Guide, so you know and understand exactly what we’re saying.


  • Adverse credit - a poor credit history.
  • APR or Annual Percentage Rate - the rate of interest and any charges you’ll pay on top of the loan amount. You’ll only pay interest on the outstanding balance. This is helpful for comparing loan and credit offers.
  • Arrangement fee - a one off amount the borrower may be required to pay for the loan to be arranged.


  • Base rate - the interest rate fixed by the Bank of England. This is the lowest rate that lenders will charge interest at.


  • CCJ (County Court Judgement) - This is issued to a customer when payments are not made and the lender decides to take action to recoup their money. Having one of these on your credit file can affect future attempts to borrow money as lenders will see you as a risk.
  • Cooling off period – a short period of time (usually 14 days) given to customers to change their mind about a loan and cancel without any penalties.
  • Credit report - a record of a person's financial history, including information about late payments and bankruptcy.
  • Credit rating – this rating is one of the factors used to assess your ability to manage and repay debt. The greater the score, the more the chance you have of being accepted for a loan at a competitive rate.
  • Credit Reference Agency - companies such as Call Credit, Experian, and Equifax compile credit histories on individuals and release these to lenders to help access credit rating and affordability.


  • Debt consolidation - transferring various current debts into one single loan.
  • Default charges - charges due if regular monthly repayment is missed.


  • Early repayment charge - a one off fee which you may be required to pay if you choose to repay your loan early.


  • FCA (Financial Conduct Authority) – a regulatory body which ensures that financial companies are maintaining the expected level of integrity of the financial market in the UK.
  • Fixed interest rate – a set rate of interest that remains unaltered throughout the period of the loan.


  • Gross income - how much you earn annually before tax is deducted.


  • Hard search – a complete search of your credit report conducted by the lender to assess your suitability. Each hard search is documented on your report so any company will be able to see your credit applications.


  • Inflation - the general rise in prices and services across the economy during a year.
  • Interest - the sum you have to re-pay in addition to the amount you borrow.
  • Index interest rate – an interest rate that is benchmarked against rate changes based on the current financial market.


  • Loan agreement - a deal between a lender and borrower which stipulates the terms and conditions of the loan.
  • Loans calculator - an online tool which swiftly estimates how much you will pay overall, dependent on the loan amount and repayment period you select.


  • Monthly repayment - agreed amount to be paid back each month over the life of the loan.


  • Overpayments - any extra payments that you make over the monthly repayment amount originally agreed.


  • PPI (Payment Protection Insurance) – an insurance product usually sold alongside a loan to ensure that your payments are covered in case of a change in circumstances where payments are no longer able to be made.


  • Repayment holiday - enables you to take a break from making monthly repayments for an agreed period.
  • Representative rate – used to represent the APR that the majority of customers will receive. Not all customers will qualify for this rate.
  • Responsible lending – the expectation on finance companies to act in a customer’s best interests, such as ensuring that a customer can afford the loan they are applying for, being clear in their T&Cs and providing support to vulnerable customers or those who are facing a change in circumstances.
  • Revolving credit – funds that are automatically renewed as the debt is paid of eg. a credit card.


  • Secured loan – a loan that is underwritten against an asset, such as your home or vehicle. You could be at risk of losing the asset if you don’t stick to the terms of your agreement.
  • Soft search – a check made by a lender to assess your credit worthiness without leaving a footprint. This means that your credit score will not be affected by the search and other lenders won’t know your report was checked. Also known as a soft credit check or quotation search.


  • Tailored quote - the ability to change the term of your loan during the application process in order to reduce or increase your payments to suit your budget.
  • Total amount payable – This is the full cost including the borrowed amount plus interest being charged.


  • Unsecured loan - a loan not secured against the borrower’s home or other assets.






Hitachi Hints and Tips is intended to be informative and interesting. It does not constitute financial advice, and you should always do further research when making any financial decisions. All information was correct at date of publication.


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