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Administration fee

A fee charged for settling within your deferral period. The fee will be no more than £29; if the interest payable at the time of settling is less than £29 you would only be charged the lesser amount.

Annual Equivalent Rate (AER)

Helps compare one financial product with another. It is usually quoted on interest paid on loans. This shows what the rate would be if the interest was paid only once a year.

Annual Percentage Rate (APR)

The rate of interest and any charges you’ll pay on top of the loan amount. This is helpful for comparing loan and credit offers.


A term to describe falling behind with your regular contractual payments or not paying the required amount.

Consumer Credit Act

The Consumer Credit Act of 1974 is the law that covers some lending within the UK. It sets out ‘rules’ for creditors when lending and collecting money. It also set outs customers' rights when they borrow money. To read more about the Consumer Credit Act, visit the StepChange website.

Credit history or credit report

A record of a person's financial borrowing, including information about late payments and bankruptcy.

Credit rating or score

A credit score is a number used by lenders to help them decide how likely it is that an applicant will pay back the money they borrow. This is ultimately used to help lenders decide which applicants to accept, and what rate to offer.

You do not have just one universal credit score - every lender and credit bureau will have their own rules and scoring systems. That said, most organisations will use similar factors to determine a customer’s credit score.

Credit reference agency

Companies such as TransUnion, Experian and Equifax compile credit histories on individuals and release these to lenders to help access credit rating and affordability.

Debt consolidation

Combining various current debts into one single loan. Read more about debt consolidation here.


An account would default if you break the terms of your agreement. You would receive a notice of the default and it would be recorded on your credit file. A default notice is required to be sent by law and the wording within the notice is required also.

Default sum

A default sum is a charge made for late, missed or returned payments. We are required to let you know when you have been charged. This is called a ‘Notice of Default Sums’.


The Financial Conduct Authority is the regulator for financial services in the UK. It’s responsible for things such as protecting consumers and keeping the industry stable.


This stands for Financial Ombudsman Service. If a financial service provider and its customer can’t agree on the outcome of a complaint, the customer can go to FOS for an independent and neutral review of what has happened.

Gross Income

Your gross income is how much you make before tax is deducted.

Interest rate

The sum you have to re-pay in addition to the amount you borrow.

Loan agreement

A deal between a lender and borrower which stipulates the terms and conditions of the loan.

Loans calculator

A loan calculator is an online tool which swiftly estimates how much you will repay each month and in total, dependent on the loan amount and loan period you choose.


A Notice of Sums in Arrears, a letter required to be sent by law when you fall two or more payments behind on your loan. The wording used is required by law and the NOSIA still has to be sent even if you have told us about your circumstances.


Any extra payments that you make over the monthly repayment amount originally agreed.

Power of Attorney

Power of Attorney or LPA (Lasting Power of Attorney) allows attorneys (an appointed person, this could be a family member) to make financial decisions on behalf of the ‘donor’.

Rebate of interest

If you settle your agreement early, you are entitled to a reduction in the interest payable. This is known as a rebate of interest.


A subsequent Notice of Sums in Arrears, is a letter, again required by law, that is required to be sent every 6 months after a NOSIA until your payments are up to date. Like the NOSIA, the wording used is required and the letter still has to be sent even if you have told us about your circumstances including work with a Debt Management Company.

Terms of Lending

Terms of Lending refers to the terms & conditions agreed to by the customer when borrowing money. The Terms of Lending can be found as part of the credit agreement.

Total amount repayable

Includes the capital amount borrowed and the interest charged.

Unsecured loan

A loan not secured against the borrower’s home or other assets. Read our guide to find out more about the difference between unsecured and secured loans.