In the world of finance we love to create new words, terms, abbreviations and acronyms and sometimes we’re not so great at explaining what these mean. To help you we’ve created a list of the most commonly used terms when you take out a loan and an easy explanation of what each term means:
APR stands for Annual Percentage Rate. This is the rate at which someone who borrows money is charged. It is calculated over a twelve month period and is shown as a percentage. The APR percentage represents the actual yearly cost of the funds over the term of a loan.
Bad Credit describes an individual’s credit score. If someone has Bad credit their credit score will be low. This may be because they have had difficulty paying money back in the past. Some institutions, such as high street banks and online lenders, will not lend to people with Bad Credit. At TFS loans we are happy to lending to individuals with Bad Credit, providing that they have someone who can act as their Guarantor.
Bankruptcy describes a situation in which a business or person becomes bankrupt. If a person or business becomes bankrupt they are unable to pay what they owe (any outstanding debts). They go through a legal process which, once completed, successfully relieves the debtor of the debt obligations incurred prior to filing for bankruptcy.
A CCJ stands for County Court Judgement. This is an order from the Country Court instructing an individual to repay a debt. A lender can apply to the County Court if a Borrower hasn’t repaid a debt, they effectively take legal action against the Borrower to recover the money. Some institutions, such as high street banks and online lenders, will not lend to people with CCJs as they are considered too risky. At TFS loans we are happy to lend to individuals with CCJs, providing that they have someone who can act as their Guarantor.
A credit history is a record of a Borrower’s responsible repayment of debts over a period of time. When applying for a loan, lenders will often look at an individual’s credit record which details out their credit history from a variety of sources, including banks, credit card companies, collection agencies and governments. This helps the lender to judge the risk of lending money to an individual.
A credit score is a three digit number that is based on information in a credit report (which is a report of someone’s debt and payment of debt). The number ranges from 300 to 850 and gives an indication of how likely a person is to repay their debts. A higher number indicates they are more credit worthy and likely to pay back their debts. Lenders will use an individual’s credit score to make a decision on whether to lend to an individual and how much they are prepared to lend.
Debt Consolidation is a method used for managing debt. It involves taking out a single new loan to pay back several of your other debts and liabilities, so an individual has one larger loan to pay back, usually with more favourable pay-off terms e.g. a lower interest rate, lower monthly payment or both.
To default means a person fails to fulfil an obligation. In the case of a loan it means a failure to repay a loan that you are legally obliged to repay.
Fixed Flat Rate
A fixed flat rate is a single fixed fee for a service or loan, which does not vary with usage or time of use. It is sometimes referred to as a flat rate or linear rate.
A Direct Debit is an arrangement for making payments, usually to an organisation, in which your bank moves money from your account into the organisation’s account at a regular time. When you take out a TFS Loan we will ask you to set up a Direct Debit with your Bank. You are effectively giving permission for TFS to collect the loan amount each month from your Bank account on an agreed date. We initially make the Direct Debit date your payday but you can choose to alter this.
Fraud Prevention Agencies
Fraud Prevention Agencies (FPAs) collect, maintain and share information on known and suspected fraudulent activity. Some Credit Reference Agencies (CRAs) also act as FPAs.
A Guarantor is a person that promises to pay back a loan if the person that borrowed the money cannot pay it back. The Guarantor for a TFS Loan must be a UK Home owner with a good credit history.
A guarantor loan is an unsecured loan that requires the borrower to have a Guarantor who co-signs their credit agreement. By doing this the Guarantor agrees to repay the Borrower’s debt should the Borrower default on the agreement repayments. Guarantor loans enable people who have either no credit history or poor credit history and have been refused credit from main stream lenders like High Street banks and credit card companies, to obtain a loan. Because they have the backing of a Guarantor they are often able to access more money than would otherwise be available to them.
A homeowner is someone who owns their own home – this can be a house, flat, apartment, bungalow etc. A homeowner does not need to own their home outright – they will often have a mortgage on it.
Rate of Interest
Rate of Interest is the interest (usually expressed as a percentage) that a financial company or bank will charge you to borrow money, or the interest it pays you when you have money in an account. In the case of a loan the Rate of Interest is the proportion of a loan that is charged as interest to the borrower. This is usually shown as an APR %.
A secured loan, is often referred to as a homeowner loan because the debt is linked to the borrower’s property. The amount you can borrow, repayment terms and interest rate offered on a secured loan is linked to your personal circumstances and the amount of ‘free equity’ you have in your property (this is the difference between the amount you owe on your mortgage and the value of your property). You can generally borrow more with a secured loan, but should you default on your payments you risk losing your property.
An unsecured loan is not protected by any collateral, so should you default on payments the lender can’t automatically take your property. Unsecured loans can be offered to people who don’t own property and that makes them available to a much wider range of people. They are flexible to repay – you can choose the amount and over what time period you repay your loan. All TFS Guarantor Loans are unsecured loans.
TFS Loans are specialist Guarantor Loan lenders. A Guarantor Loan is a form of loan that requires someone to act as the Borrower’s Guarantor. We offer Guarantor Loans from £1,000 to £15,000, over 1 to 5 years.
Apply for a TFS Guarantor Loan using the button below:Apply now
Representative APR is 48.9%