Jargon

Here at Paydayloan.co.uk, we understand that not everybody who is interested in taking out a payday loan, is a finance professional and that some of the words that we’ve mentioned throughout our website can be a little confusing. To make your lives easier, we’ve taken the time to go through some of the more confusing terms that you may hear/read on our website. Our ultimate goal is to make your lives as simple as possible and to get you the financial help that you need as fast as possible. The more you understand about how payday loans work, the easier the process will be for you.

  1. ACH
  2. AER
  3. APR
  4. Arrangement fee
  5. Arrears
  6. Assets
  7. Assurance
  8. BACS Ltd
  9. Base rate
  10. CAB
  11. Cash advance
  12. CCCS
  13. CCJ
  14. CHAPS
  15. Charge card
  16. Cleared balance/Cleared funds
  17. Clearing cycle
  18. Credit rating
  19. Credit report
  20. Debit card
  21. Debt
  22. Direct debit (DD)
  23. Debt consolidation
  24. Doorstep loan
  25. EAR
  26. Equity
  27. Fixed-rate interest
  28. Flexible mortgage/ loan
  29. Gross
  30. Guarantor
  31. Interest
  32. Investment
  33. Loan
  34. Mortgage
  35. Net
  36. Net interest rate
  37. Nominal annual rate
  38. OFT
  39. Online payday loans
  40. Outstanding balance
  41. p.a.
  42. Payday advance
  43. Payday loan
  44. Personal loan
  45. PIN
  46. Promise date
  47. Rate
  48. Redemption Penalty
  49. Remortgage
  50. Repayment mortgage
  51. Representative APR
  52. Return
  53. Secured loan
  54. Share
  55. Share dealing / Share trading
  56. Stock
  57. Short term loan
  58. Trust
  59. Unarranged borrowing
  60. Unsecured loan
  61.  
 

 

ACH

ACH is an abbreviation for Automated Clearing House. An ACH usually looks over all the electronic cash transactions that happen on a daily basis. Every country has their own ACH and for the most part, they only operate during the regular business days and hours – meaning no weekends. The name of the automated clearing house in the UK is BACS Ltd. We have more information on BACS Ltd. a little further down.

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AER

AER is an abbreviation for Annual Equivalent Rate and all those confusing words really just mean that it’s a representation of the interest rate that you would have if all of your gross interest was paid and compounded annually. It was originally designed to compare the annual interest between savings (or investments) accounts with varying compounding terms (ex. daily, monthly, annually). AER doesn’t usually include or take into consideration one-time charges, like a sign-up fee for example.

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APR

APR stands for Annual Percentage Rate and is probably one of the most used and misunderstood terms in the world of finance. It refers to the interest that you would need to pay on top of whatever amount you have borrowed over the period of a year (hence the Annual Percentage Rate).

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Arrangement fee

This is just a fancy way of saying ‘finder’s fee’ or hooking somebody up with a large loan, overdrafts and/or mortgages. This fee is charged by the company that arranged the loan in order to cover their costs of operation.

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Arrears

When you are classified as being in arrears, it means that a payment for either a scheduled loan or other kind of credit repayment is overdue. If a person is in arrears, they may have problems in the future in obtaining further lines of credit because it affects your credit rating. However, if the debt owed has been taken out against a property, it is likely that the property be repossessed to clear the arrears. If you think that you may be in arrears (in debt and cannot pay) we advise you to talk to your creditors and you may also find support from organisations such as the Consumer Credit Counselling Service. The most common place example of arrears is the way in which most employees are paid. If you think about it, payday is only at the end of a work week or month – but you’ve earned that week/month’s salary before payday.

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Assets

An asset is anything that you own which may be of financial value and may include cash, property, jewellery, electronic goods or even investments. If you do not seek out the proper help, and remain in arrears (see above) for an extended period of time, the people to whom you owe money (aka creditors) may have the right to seize some of your assets to offset your debt.

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Assurance

Assurance just means that there is an insurance policy that pays money to the next of kin if the policy holder should pass. In doing so, you are assuring that your loved ones have sufficient funds to take care of themselves after you die and also to cover any funeral expenses.

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BACS Ltd

BACS Ltd (formerly the Bankers Automated Clearing Service) is an organisation which is owned by a group of banks to provide a clearing service for electronic transactions in the UK.

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Base rate

Base rate really just means the standard interest rate from which lenders set their rates for lending loans or savings. In the UK, the Bank of England sets (or resets) the base rate every three months.

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CAB

CAB is an abbreviation for the Citizen’s Advice Bureau – this is an organisation which helps people try to resolve their legal or financial by offering free and confidential advice. CAB is mainly funded by government grants and partially funded by charitable donations.

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Cash advance

A cash advance can either be through a credit card or a loan agreement. You might hear this phrase being used to describe a relatively small loan amount which is repaid over a short period of time. This is in contrast to more traditional loans which are usually larger amounts of money which are then repaid over a year or more. The Payday Loan Company has been providing people with cash advances since the year 2000.

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CCCS

CCCS stands for The Consumer Credit Counselling Service which is a registered charity in the UK whose purpose is to assist people who may be experiencing financial difficulty by providing free advice.

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CCJ

If you are in debt (or arrears) the creditor to whom you owe money has permission to take legal action against you in a County Court to attempt to claim the money back via the courts. So long as you are able to and you pay whatever the outstanding amount due to the creditor, you can avoid legal proceedings. However, should you choose not to pay or are unable to pay the court hearing is fairly simple and is entirely private. During the heading, the court will review all the facts and decide whether you owe any monies. If, at the end of the hearing, you are found to owe money, the court will decide how you should repay your debt and this is called a County Court Judgment (CCJ). In Scotland, such hearings or claims are handled by the Sheriff Court (not the County Court).

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CHAPS

CHAPS, is the abbreviated form for Clearing House Automated Payment System. CHAPS allows money to be transferred from one bank account to another on the very same day, so long as the initial instruction is given before 3pm on a business day.

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Charge card

A charge card behaves similarly to a credit card in that it allows you to charge any purchases to the card. The only difference is that unlike a credit card, a charge card does not provide you with the option of having a minimum payment and you must settle all the charges in full for each month. Should you fail to pay on time, most charge card operators will penalise you with hefty interest rates.

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Cleared balance/Cleared funds

When you hear these terms it means that your cash, cheque, electronic payment or overdraft funds are available for withdrawal. So, this means that you can only withdraw and/or transfer funds to another account once your balance is cleared. Usually, your cleared balance is updated throughout the day.

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Clearing cycle

This term refers to the process that your cheques, cash or electronic payment need to go through when deposited into your account. Depending on the type of credit that you’ve deposited, the clearing cycle period may vary. An example would be cheques taking up to 3 days to clear, while deposited cash can be available almost immediately.

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Credit rating

You hear a lot about credit ratings, especially when you’re trying to take out a loan from a banking institution. The nice thing about payday lenders is that having a good credit rating is not a qualification that most companies will require. For other lending institutions (such as banks), a credit rating tells the potential lender the credit ‘worthiness’ of an individual, corporation, or even a country. Credit ratings, are also commonly referred to as credit scores, are designated to an individual after taking into consideration several different factors which may include one’s financial history, assets as well as any liabilities you may have. Having a good credit rating lets the lender know that you are more likely to be able to pay back a loan, while a poor credit rating tell the lender that you have a higher chance of defaulting on your payments. You may even be refused an application for a loan or charged significantly higher interest rates if you have a poor credit rating.

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Credit report

A credit report is a report submitted to lenders which summarise an individual’s credit history. The information provided in the report is collected and kept up to date by different organisations which include credit reference agencies, collections agencies, retailers and banks. Should you wish to see your own credit report, you can do so through one of the credit reference agencies.

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Debit card

A debit card, as opposed to a credit card or charge card, withdraws the money with a day or two from your account when you use it to make a purchase. If you attempt to make a purchase with funds that are not available in your account, the transaction will be denied.

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Debt

When you have debt, it means that you owe money. It refers to all kinds of money owed – whether it is to an individual person or a company.

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Direct debit (DD)

Direct debit means that you’ve given your bank permission to release payment to someone else (like a company, for example) with the funds in your account. This is usually used to pay regular bills (such as cable, internet, utilities etc) automatically.

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Debt consolidation

When you are in debt, one of the easiest ways to get out of debt is to take out one large loan that is big enough to pay off any other smaller loans or financial commitments that you may have. In doing this, you can often times secure yourself a lower interest rate and also allows you to just focus on the repayment of one loan instead of several smaller loans. Often times, it will involve converting and combining your unsecured loans into one large secured loan that is connected to some kind of asset, such as real estate property or a car.

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Doorstep loan

These loans are personal, unsecured loans which are usually lower amounts offered at much higher interest rates. The cash is usually delivered by a local agent of the agency that you’ve selected directly to your doorstep. The repayment of a doorstep loan is also collected in the same manner.

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EAR

EAR is an abbreviation of Effective Annual Rate (not to be confused with the human body part that helps us hear)! Unlike APR, the EAR does not include any additional fees and it is the amount of interest charged on an overdraft or loan annually. EAR differs from APR because it does not include any additional fees or charges.

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Equity

Equity is, simply put, the value of a property after you’ve paid off any mortgages or other charges associated with the property. Usually, when you hear about equity in relation to a company that’s because equity is divided into many equal parts, and that is what a shareholder owns.

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Fixed-rate interest

A fixed-rate interest means that the interest rate will stay the same for a specified period of time.

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Flexible mortgage/ loan

This is a mortgage that allows flexible payment amounts and schedule without penalty. So, you can make overpayments, underpayments or even a payment holiday which means that for an agreed period of time, you won’t be required to submit payment for your mortgage.

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Gross

Gross refers to an amount of cash, before any deductions have been. An example of this would be your gross salary which is your salary before taxes have been deducted and then your take-home salary which is the amount that is written on your cheque.

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Guarantor

A guarantor is a person which can guarantee loan or mortgage payments on the borrower’s behalf. Sometimes, a guarantor is used to support a borrower who has insufficient income to properly qualify for their mortgage in their own right.

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Interest

Interest is a percentage rate that you pay when you borrow money or when you have funds in a savings account. Some common types of interest are; APR and EAR.

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Investment

An investment is something that you invest time, effort or money into in order to someday make a profit from it. One of the most popular investment types is real estate or housing; you purchase the property at a low price in the hopes that over the course of time, the value of the house will appreciate (increase) and you will be able to sell it at a profit.

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Loan

A loan is any amount of money that is borrowed, so long as it paid back on the agreed upon terms. One type of loan is a short terms cash advance from The Payday Loan Company.

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Mortgage

A mortgage is a type of loan that is most given to help an individual buy a piece of property, such as a house or an apartment. Usually the loan is paid over a period of 25 years or more and the lender has the right to repossess and/or sell the property should the individual default or fail to make payments.

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Net

Net is the opposite of gross (see above) and it represents the amount or sum of cash after the deductions have been made, such as taxes or other fees. Your net salary is your gross salary once taxes have been deducted. Your net salary may also be referred to as ‘take-home pay’.

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Net interest rate

Net interest rate is the rate of interest payable after the deduction of UK income tax at the rate specified by law, which is currently 20%. Depending on the circumstances for each individual, the rate of tax may also differ.

 

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Nominal annual rate

This would apply only if the interest was not added every year and there was no inflation. (Yeah right! We wish!)

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OFT

The Office of Fair Trading (OFT) is a non-ministerial government department that was established in 1973. The OFT is responsible for making the markets work the way they are supposed to for consumers and they do so by promoting their interests through all of the United Kingdom. They also ensure that the businesses are operating fairly with a healthy level of competition. The Payday Loan Company in addition to many other payday loan lenders are being regulated by the OFT.

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Online payday loans

Online payday loans are loans which are applied for over the internet. Online payday loans are a relatively new industry, but there are many lenders out there, including The Payday Loan Company which offers online payday loans and cash advances.

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Outstanding balance

This usually refers to a certain amount of money owed that you have yet to pay back. With each payment that you make towards the repayment of your loan, the lower your outstanding balance becomes.

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p.a.

This stands for per annum, meaning each year.

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Payday advance

Payday advance is just another way of saying a payday loan.

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Payday loan

A payday loan (also commonly referred to as cash advance or payday advance) is a short term loan that should ideally be used to cover your expenses until the next payday. There is usually a fixed fee for every £100 borrowed and the loan is repaid on your next payday, regardless of where you were in the pay period at the time of application. Payday loans should be used when a loan from a bank or other lending institution is not a viable option.

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Personal loan

Personal loans are offered by banks and other lenders to individuals for their personal use, such booking a holiday or purchasing new house furniture. Repayment periods can begin at as little as one year and going up to five years, depending on the lender.

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PIN

PIN is actually an acronym for Personal Identification Number, which is usually (though not always) a four-digit number that you enter into an ATM or card terminal when you want to access your account or complete a purchase.

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Promise date

This is the agreed upon date where you promise to definitely pay back your loan.

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Rate

This refers to the amount of interest that a lender will charge you for the payday loan. It is commonly referred to as the rate of interest.

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Redemption penalty

Most loans are borrowed over a set period of time, whether it’s 1 year or 10 years, and should you choose to repay the loan in full before the end of your agreed upon, you may be faces with a penalty charge. This penalty is most commonly found among mortgage loans and is only in place so as to deter customers from re-mortgaging with a better loan offer from a different lender.

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Remortgage

When you hear the term remortgaging, it is referring to the process of changing or switching to a new mortgage loan, while remaining in the same house or apartment. The most common reason for a remortgage is when a person is interested in switching to a new lender who may be offering better terms. The person will then use the funds from the new mortgage to settle any outstanding debts towards the old mortgage. It is important to keep in mind, however, that you may be faced with additional fees or penalties and it might be necessary to have your home revalued.

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Repayment mortgage

A repayment mortgage is a long term loan that is usually put towards the purchase of real estate, especially homes. With each monthly payment, part of the loan will be paid towards to the interest on the loan and another part will be towards the actual repayment of the loan. In doing so, the amount that the person owes will be reduced, gradually, over time.

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Representative APR

Effective as of February 1, 2011, The Department for Business, Skills and Innovation in the UK (BSI) has created a new directive in which it states that should any advertisement include an interest rate (or any other amounts which relate directly to the cost of credit), there must also be a representative example. This representative example (of the representative APR) must be a reflection of at least 51% of the business that said advertisement will likely generate. It must include any and all charges that may be associated with the loan as well.

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Return

Return, in the world or finance, essentially means a profit. It usually refers to any kind of profit or return from an investment.

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Secured loan

A secured loan is a loan where the lender has the right to reclaim the loan value from an asset, such as your property or car, should you fail to keep up payments. Mortgages are the most common type. All secured loans are a big commitment and carry significant risk, but you can often benefit from a lower rate of interest. They are typically used for larger sums of money over several years or even decades in the case of mortgages.

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Share

A share is another name for an individual unit of ownership in any company.

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Share dealing / Share trading

When you buy or sell shares, it is called trading or dealing.

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Stock

Stock, share and unit are all the same terms that have the same meaning in the financial industry.

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Short term loan

Depending on the lending institution that you speak to, the definition of a short term loan may vary. A bank, may consider a short term loan to be a loan paid back over a period of 6 months or a year, while other lenders would consider it to be a loan paid back over a period of 30 days. The Payday Loan Company’s definition of a short term loan means that you are expected to repay the loan within or up to 30 days. Usually, the loan amount is settled with one simple repayment on the date of your choice. Another example of a short term loan is what we commonly refer to as a payday loan and usually it requires repayment on your next payday. A payday loan also means that the date of repayment is less flexible.

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Trust

A trust is a legal arrangement, where a person or organisation can control property and/or money for the benefit of another person or organisation. You’ll often times find this arrangement amongst the finances of children – whereas the parent(s) control their finances until the child comes of age. A trust may also refer to an organisation that has responsibility for such a legal arrangement.

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Unarranged borrowing

This is also commonly referred to as an unauthorised overdraft, which may cause you to be penalised with heavy fees.

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Unsecured loan

The payday loans and cash advances offered by The Payday Loan Company and its’ partners are classified as unsecured loans. It basically means that should you fail to make payments towards your agreed upon loan amount, then the lender does not have immediate rights to reclaim the value from your assets.

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Data Protection Reg No: Z3508710 - Consumer Credit License Number: 655622