When applying for a loan, there are a number of terms you may stumble upon and be unaware of their definition, much like our previous post we've compiled a list of terms that should help you out:
APR/Annual Percentage Rate
The Annual Percentage Rate (APR) is the percentage of interest charged against your loan each year. It takes into account the value of the loan from the start of the loan period to the end of the loan period. As with anything you buy, there are charges, and the APR rate is a way of comparing prices of loans from one company to the next, to get the best value for money. If the typical APR is 7% on a loan of £1000 for example, you will pay 7% of the total loan amount each year of the repayment, as interest and charges, which will automatically be part of your repayments.
County Court Judgements (CCJs)
All lenders will use legal methods to ensure that every repayment is made as agreed. If you are unable to meet your repayments you may face a County Court Judgement (CCJ) which will charge you with the amount owed and give you one month in which to pay the full amount. If you do not pay the full amount within one month your CCJ will be registered with the Register of County Court Judgements and Credit Reference Agencies will note this on your file. This may make it difficult for you to obtain credit, loans or mortgages in the future. Some employers and landlords now also credit meaning that having a CCJ against your name may harm your chances of getting work or renting a home. Loans4Tenants do not use court action lightly and will always try other methods before going to court to reclaim money owed.
Joint Applications
A joint application is an application made by two people, normally the main applicant and their spouse. A second applicant is not the same as a Guarantor. Even if you are applying for a joint guarantor loan most lenders will still require you to provide a homeowner guarantor to support the application.
Personal Loan
A Personal Loan is a way of borrowing a large sum of money. Personal loans can be either secured or unsecured. The loan is usually given in a lump sum, and will be repaid by you in Monthly Repayments. As the title implies the finance from personal loans can be used for any personal purposes such as a new car, wedding planning or even simply consolidation of current debt.
Security Check
As part of the underwriting process, lenders will perform a Security Check, to make sure they are talking to the right person (you). This complies with the Data Protection Act (DPA). Sensitive information about your address and financial dealings could put you at risk if it is revealed to the wrong person. So for your security, when performing a security call, lenders will ask you a number of questions that confirm your identity. This could be your address, your date of birth, or some information about your loan, for example how much it was for and how much you pay back each month.
No comments:
Post a Comment