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Adverse credit

A poor credit history.

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. You’ll just pay interest on the outstanding balance. This is helpful for comparing loan and credit offers.

Application/arrangement fee

The one-off amount the borrower may be required to pay for the loan to be arranged.

Base rate

The interest rate fixed by the Bank of England. This is the lowest rate that lenders will charge interest at.

Credit history or credit report

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

Credit rating or score

This rating is one of the factors used to assess your ability to manage and repay debt. The greater the score, the more the chance you have of being accepted for a loan.

Credit reference agency

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

Debt consolidation

Transferring various current debts into one single loan.

Early repayment charge

A one-off fee which you may be required to pay if you choose to repay your loan early.

Equity release

Releasing some of the value locked in a property so that homeowners can use it for other purposes.

Fixed interest rate

A set rate of interest that remains unaltered throughout the period of the loan.

Gross Income

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


The general rise in prices and services across the economy during a year.

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

An online tool which swiftly estimates how much you will pay overall, dependent on the interest rate and loan period you pick


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

Repayment holiday

Enables you to take a break from making monthly repayments for an agreed period.

Secured loan

Aimed at homeowners, a secured loan uses your home to secure the debt and is usually used for larger loans, over £25,000. This means your home could be at risk if you default on the loan. 

Standard Variable Rate (SVR)

The rate the lender charges which varies according to changes in the base rate, affecting your interest payments accordingly.

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. This normally restricts the amount you can borrow, with most lenders offering up to £25k unsecured.