Loan Glossary

Unsecured Loan –

With an Unsecured Loan, there is no risk to your personal property if payments are unable to be met. An unsecured loan is typically borrowed against future paycheques.

Secured Loan –

Property is a security for this type of loan including mortgages. It ensures the lender is reducing their risk of losing money if repayments are not met. APR is lower with a secured loan and is easier to obtain for those borrowers suffering from less than perfect credit history.

APR –

This stands for Annual Percentage Rate and any lender must inform you by law what the APR on their loan is before any agreements are signed. The lower the APR the better, as this percentage is the total sum of interest that will be paid over the whole period.

Loan Agreement –

This is the written contract between the lender and the borrower which confirms the specific rights of each party in regards to the specified loan.

Guaranteed Loan –

This involves a third party who has agreed to pay any outstanding debt if a borrower fails to meet repayments.

Online Loan –

An online loan can be applied for completely online by online loan company. With the internet being more viable, loan companies are branching out on the web to appeal to more consumers.

Term –

This refers to the duration of time that full repayment of the loan or other contractual obligation will be completed.

Credit Rating –

Lenders use a points rating system which assesses a company or individual of their credit worthiness and risk factor. Comprised of information from lenders and financial institutions as well as public records such as electoral roll, a lender can deny you credit but must inform you of the main reason for this. Everyone has the right to view their information which is contained within a credit report and ensure this is accurate and can ask for the contact information of the Credit Reference agency that was used to compile the information.

Interest Rate –

Interest is charged on loans or rewarded for savings and is created as a percentage. This varies depending on the chosen loan or savings plan and according to the base rate supplied by the lender.

IVA –

This stands for Independent Voluntary Agreement and is a formal agreement between lender and borrower. To make it legal, it is arranged by a licensed insolvency practitioner, and is an agreement of reduced repayments which goes towards paying off a percentage of the remaining debt.