Secured Loan Glossary For The UK Market
There are so many terms involved in your secured loan contract that it may seem impossible to understand all of them. Many people enter into contracts they understand only in terms of their own signature.
Lenders in the UK do not often make much of an attempt to explain the jargon to you unless you ask specific questions. Even then, they may deflect or give answers 1that leave you even more confused. When you are seeking a secured loan, you need to have an idea of what you are getting yourself into so it is good to have a secured loan glossary of common terms. Secured loan glossary helps you get the information about terms which the lenders do not tell you at the time of issuing a loan.
You are the one responsible for the full repayment of your loan. Since you are getting a secured loan, you need to understand beforehand what you may get yourself into if you are unable to repay on time or at all. By not paying on time or at all, you jeopardize not only your credit standing but also the property you may have used as collateral. It is a good idea for you to do research and understand the process and terminology as much as possible.
This is the annual percentage rate. It is an interest rate computed each year that is inclusive of all costs and fees associated with loans and credit offerings. It gives an average of the interest you will face over the course of your loan term.
Failing to make a scheduled payment on your secured loan – If you are unable to make payments on your loan in full, you should contact the lender to avoid having arrears on your credit history.
Taking out a loan to pay off all of your outstanding debts – Debt consolidation helps pay off multiple credit cards, loans or other bills you may have. It turns a number of annoying bills into one monthly payment and can save you money.
A document that lists the responsibilities of the lender and borrower – It is usually a list of terms and conditions for the loan and includes information on the loan amount, APR, repayment information, and the duration of loan. For a fixed rate loan, the interest rate remains the same its entire duration. Your payments do not fluctuate with the market rates and your monthly bill always remains the same.
Loan to value ratio – It is the sum of the secured loan and the value of the property the loan is secured against.
Payment Protection Insurance
This is a loan insurance guaranteeing that payments will be made on your secured loan even if you are physically unable due to unemployment, accident, injury, illness or death.
A loan that is taken out against some property that you own – This is usually your home or vehicle. It guarantees that your loan will be repaid either by your monthly payments or repossession and resale of your property by the lender in case of non-payment.
A loan with interest rate changes tied to the market rate – You benefit from lower monthly payments when the market rate is down, but the rates can go up and your payments can increase.