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Loan Jargon - a comprehensive reference of loan terminology from i Secured Loans

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Absolute title
Land registered with the Land Registry, where the owner has a guaranteed title to the land.
Acceleration Clause
A section of a contract which states how a loan may be required to be repaid early should the borrower default on other clauses of the contract.
Accident, Sickness and Unemployment Insurance
Income protection in the event of an accident, or illness, or redundancy resulting in unemployment. This pays out as a monthly tax-free income. There's a set period you have to wait before receiving a payout. The longer you wait the cheaper your monthly premiums. This sort of insurance can give you real peace of mind.
Acceptance credit
A line of credit given by a bank to an importer against which an exporter can draw a bill of exchange.
Actuary
A statistician who calculates probable lifespans so the insurance premiums can be accurately determined
Adjustable rate mortgage
A mortgage where the interest rate changes according to the current market rates
Adjusted Gross Income
The amount of annual income that someone has after various adjustments for income or corporation tax purposes.
Ad Valorem
A tax or commission that is calculated on the value of goods or services provided, rather than on their size or number e.g. Value Added Tax.
Adverse Credit
A person with a history of failing to keep up credit agreements is referred to as having an adverse credit history. Anyone who has become bankrupt, has County Court Judgments (CCJs) against them, has mortgage arrears or have made late payments on any credit arrangement can be described as having adverse credit. People with averse credit ratings usually have to pay higher interest rates on a loan or mortgage. But those with a poor credit rating, may find that taking out a Secured Loan as opposed to an unsecured loan will mean that they benefit from lower interest rates.
Addendum
An appendix or addition to a contract.
Additional Principal Payment
This is additional money included in the monthly payment to reduce the principal and so shorten the term of the loan.
Add-on-interest
The interest paid on the principal for the duration of the loan.
Adjustment Date
The date when the interest rate changes on a variable rate mortgage.
After-Acquired Collateral
Collateral for a loan that a borrower obtains after making the contract for the loan.
Age Analysis of Debtors
The amount owed by debtors, classed by the age of debt
Aged Debt
A debt that is overdue by one or more given periods.
Aged Debtor
A person or organization responsible for an overdue debt
Alienation Clause
This clause requires the borrower to pay the balance of the loan after the property is sold.
APR or Annual Percentage Rate
This is the rate of interest that would exist if it were calculated as simple rather than compound interest.
This is helpful to compare the different interest rates on offer. It takes into account the costs of setting up the loan, how often interest is charged, any discount rates, and is a measure of the average rate of interest over the duration of the loan. All lenders must, by law, inform the borrower of the APR, and it's calculated in a uniform way.
It is calculated by the formula:
APR = ( 1 + i/m)m - 1.0
Where i is the interest rate quoted as a decimal and m is the number of compounding periods per year
Application
A document showing a potential borrower's income and debts in order to determine credit worthiness.
Application Fee
A fee a lender charges to process a loan application.
Applied Nominal Interest Rate
The rate used to calculate the interest due.
Arrears
Arrears refers to the situation when the borrower misses one or a series of monthly payments. The payment is normally a direct debit. If this happens the borrower is wise to contact the lender as soon as possible as they may be able to assist.
Arrears Fee
When a loan account is in arrears this is the monthly charge to cover additional administration costs cause by the arrears.
Level Term Assurance
Life assurance which pays out a lump sum if you die during the term. This is suitable for interest only loans as the amount owed on the loan remains the same throughout the duration of the loan.
Asset
Any property, stock, shares, savings and personal possessions a person owns which has a cash value.
Asset Conversion Loan
A loan that the borrower will repay with money raised by selling an asset.
Assumable mortgage
A mortgage that the buyer of the property can take over from the seller

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