Financial products and providers often use words which can be hard to understand. On this page, we have created a list of commonly used words and phrases alongside a small explanation of what they mean.
Should you need anything explained in more detail, please contact your local branch for support. They are happy to help.
This refers to the amount of interest that has been charged on a loan but remains unpaid; it adds to how much a borrower owes. Interest calculations can be tricky to understand, especially if payments have been missed or paid late. This is because we work out the interest daily and apply it every month. It isn’t just charged on the outstanding loan amount but also on any unpaid interest that was calculated previously.
Adjudicator
This is an individual who investigates complaints at the Financial Ombudsman Service and makes a decision about who is right between the customer and the firm. If you are unhappy with the outcome of your complaint and refer it to the Financial Ombudsman Service, an Adjudicator will make an official assessment to determine the outcome of your complaint. An Adjudicator's assessment is not legally binding.
Affordability
This is your ability to make the monthly loan repayments after taking into account your regular income and spending.
APR
APR stands for annual percentage rate. It is a standard way of showing the cost of a loan that you can use to compare loan offers from different lenders. See here (link to FAQs) for more details.
Arrears
When you do not keep up with your monthly repayments or a payment is overdue, you may ‘fall into arrears’. The amount of arrears is accrued from the date of when the first missed payment was due.
B
Bankruptcy
A legal process through which people who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor.
Breathing Space
If a borrower encounters difficulties in repaying a loan, for example if they lose their job, lenders are sometimes able offer a period of 'breathing space'. This is to allow time to work out a debt management plan. Once triggered, lenders will not make contact or take further action for a period of time, typically 30 days (extendable to 60) or 42 days in Scotland.
Borrower
The borrower is the person getting the loan. The lender is the person giving the loan.
Broker
A broker is a type of business that helps customers find a direct lender. A broker will search the whole market or a restricted panel in order to find customers loan options that suit their requirements and circumstances.
Buffer
This is an additional amount added to your living expenses to cover unexpected events. As part of your loan application, we consider your income and expenses to determine how much money or disposable income you will have left over at the end of each month after repaying your loan, we also add an additional sum to your calculated disposable income to cover unexpected costs that may arise.
C
Conditional Approval
Based on the information you have provided online and the checks we have made so far, we can progress to the next stage of your application. However, we still need to do more checks before we can fully approve your application. See FAQ for more details.
A type of court order in England, Wales and Northern Ireland that may be registered against you if you fail to pay an outstanding debt. A CCJ will affect your credit rating and could result in refusal of credit. Details of the CCJ will remain on a credit file for 6 years.
CPA
A continuous payment authority (CPA) is when you grant a lender permission to take two or more payments from your debit card.
Credit Check or Credit Search
When a company such as a lender, contacts one of the main credit reference agencies to obtain details of your credit history. This helps them to understand your financial behaviour. Lenders need to do this before they can process your application. We use soft search technology when you apply. See more under Soft Search.
Credit File
A credit file contains a customer's financial information such as debts, date in which loans were taken out, balances, deliquencies or judgements. To process your loan application, Everyday Loans will need information on your credit file and will ask for your permission to retrieve your credit records to determine if our loan is suitable for you.
Credit Score
Credit reference agencies collect information from many sources to create a file with your personal credit history and a credit score. A high credit score indicates a person has a good record of making payments on time, while a low score could mean past problems or a limited track record. Lenders use this information to help assess new credit applications. Here at Everyday Loans, the credit reference agencies we use are Equifax and TransUnion. You can sign up to view your credit file information free of charge at www.equifax.co.uk and www.transunion.co.uk.
Creditworthiness
This is the process that we follow to make sure that you are able to afford a loan and that it is suitable for your needs. Lenders all have different ways to measure this.
Credit Reference Agency (CRA)
A company that holds your credit records and passes on information to lenders to help assess your affordability and credit rating. The main CRAs are Experian, Equifax and TransUnion.
Consumer Credit Act
An act of Parliament that increased consumer protection when borrowing money. The act applies to certain financial products such as personal loans and credit cards. All loans offered by Everyday Loans are covered by the Consumer Credit Act.
D
Debt Respite Scheme
Customers experiencing difficulties are often able to get free debt advice, including about breathing space. FCA-authorised debt advisors can advise customers who live in England or Wales about a particular type of breathing space that lasts for 60 days under the government's Debt Respite Scheme. You can read more about this at https://www.moneyhelper.org.uk/en/money-troubles/dealing-with-debt/what-is-breathing-space-and-how-can-it-help-me.
The Debt Respite Scheme can also help customers who have an Approved Mental Health Practitioner are suffering a mental health crisis. In this case, the breathing space will last for the duration of treatment, plus 30 days.
Debt Relief Order (DRO)
A form of insolvency designed as a low-cost alternative to bankruptcy. It’s suitable for people on a low income, who have a relatively low level of debt that they’re unable to repay within a reasonable amount of time.
Debt Consolidation Loan
A loan which merges different credit commitments into one repayment plan. With a typical debt consolidation loan, you borrow enough money to pay off all your current credit commitments and owe money to just one lender.
Default
Default is when a borrower does not pay back a loan according to the terms of the loan agreement. It typically occurs after a customer has missed several payments and the lender believes it is unlikely that the customer will get back on track. It means that you are in breach of your agreement and allows the lender to progress with legal action. Your lender could sell the outstanding debt to a specialist debt collector or they take you to court, resulting in a county court judgement (CCJ). A default could also negatively affect your credit score and make it more difficult to take out new financial products such as a new loan, bank account or mortgage.
Deferral
A deferral is a form of forbearance that a lender may offer to customers who have a short-term difficulty with their repayments. If a customer suffers a one-off problem, perhaps because they received a large, unexpected bill, the lender may agree to defer one or more payments to the end of the contractual loan period. The customer will then resume paying their usual monthly amount. A deferral often results in the customer needing to pay more overall because more interest will build up before they fully pay off the loan.
Direct Debit
An automated payment method that is used for paying bills and other commitments. Many of our customers pay back their loan using Direct Debit payments.
Direct Lender
The business responsible for lending you money. Everyday Loans is an example of a direct lender.
E
Early Repayment Charge
The amount of money a lender may charge if you decide to pay your loan off earlier than the agreed term of the loan. If you’re considering paying a loan off early, make sure you check your loan agreement or contact your provider to best understand these charges.
Electronic Signature or E-sign
A method of signing documents online, without needing to print them, like an electronic version of a pen and paper signature. It is both secure and legally binding. Everyday Loans sometimes uses this type of signature when customers are unable to visit one of our branches.
F
Final Response Letter
This is a resolution letter issued to a customer to resolve their complaint, it is issued within 8 weeks from the date of the complaint. The Final response letter details the outcome of our investigation into a customer's complaint and provides the customer with information on how to escalate their complaint to the Financial Ombudsman Service if they are unhappy with the outcome they have received.
Financial Conduct Authority (FCA)
UK financial regulator with the power to introduce and enforce rules which govern the UK’s financial services industry. The FCA’s role includes protecting consumers, keeping the industry stable and promoting healthy competition between financial service providers. All credit lenders and brokers must be authorised by the FCA to continue to do business in the UK.
Financial Ombudsman Service
This is a service that settles complaints and disputes between customers and firms that provide financial services, this service is free to customers. Our customers can refer their complaints to the Financial Ombudsman Service if they are unhappy with the outcome of their complaint. Customers have a period of six months from the date of their complaint final response letter to refer their complaint if applicable. The Financial Ombudsman Service can be reached using the details below:
The Financial Ombudsman Service
Exchange Tower
London
E14 9SR
Tel: 0845 080 1800
Website: www.financial-ombudsman.org.uk
Forbearance is the general term used to describe measures that a lender may offer to help a customer if they have difficulties repaying a loan. A payment arrangement and a deferment are examples of forbearance.
G
GDPR
The General Data Protection Regulation is part of the law regarding data protection and privacy. It sets out rules that lenders and other organisations must follow when processing and storing information about you.
This is when a company accesses your credit file at a credit reference agency as part of a full application for credit. Lenders use credit searches, but so do utility companies and mobile phone companies. Credit searches are recorded on your credit file, and too many in a short time can make it harder to get approved for credit in the future.
I
Individual Voluntary Arrangement (IVA)
A formal and legally binding arrangement between a customer and their creditors to repay debts over a period of time that can only be set up by an Insolvency Practitioner.
J
Joint Loan
This is when two people, usually a couple, enter into a loan agreement together. This means both people are responsible for repaying the loan. Joint loans are available with us, see https://www.everyday-loans.co.uk/joint-loans
L
Loan Agreement
This is a legal contract between a lender and a borrower. It contains important information such as when loan payments are due, the APR and what happens when you are unable to make payments.
O
Office for National Statistics (ONS)
This is a firm that produces official statistics, it collects and publishes information relating to the economy, population and society. Everyday Loans uses data from the office for national statistics as part of a process to help establish a baseline figure for expenses, this is then compared with details on the customer's bank statements and documents to establish the customer's living expense.
Ombudsman
An Ombudsman is an individual who investigates complaints at the Financial Ombudsman Service, acting as the last level of dispute resolution at the Financial Ombudsman Service. If you have referred your complaint to the Financial Ombudsman Service and received an initial assessment from an Adjudicator which you are unhappy with, you can ask for your complaint to be reviewed by an Ombudsman. An Ombudsman's decision is typically legally binding.
Overdraft
This is where a person draws more money out of their bank account than they have put in. That means they have a negative balance that will need to be repaid to the bank.
Open Banking
Open Banking allows a bank account holder to share certain information about their bank account to third-party financial service providers such as Everyday Loans. Information shared can include account balances, transaction history and more. Everyday Loans uses Open Banking to help us assess your suitability for finance.
P
Payment Arrangement
This is an arrangement to repay debt in affordable monthly amounts, it may have an impact on a customer's credit records. Everyday loans treats all its customers fairly, offering appropriate forbearance depending on their personal circumstance to all our customers.
Personal Loan
A personal loan is an agreement between one person and a financial institution, where a person borrows a fixed sum that they receive upfront, with the person then repaying the amount borrowed, with interest, over a specified period of time.
Principle
This is the amount of money you borrowed from the lender. It does not include interest, fees or other charges.
Protected Trust Deed (PTD) (Only available in Scotland)
A formal and legally binding arrangement between a customer and their creditors to repay debts over a period of time that can only be set up by the Accountant in Bankruptcy (AiB).
R
Representative APR
When lenders advertise their loans, they will quote a Representative APR. It means that more than half (51% or more) of their customers receive a loan with an APR that is the same as, or lower than, the figure shown. Depending on their credit score, different customers may be offered loans with different APRs, which may be higher or lower than the representative rate.
Responsible Lending
Responsible lending is all about making sure that a customer will benefit from any finance given to them by putting the customer’s best interests first. This should include ensuring that the loan is affordable and sustainable, it is fit for purpose and key information about the loan is adequately explained, prior to loan approval.
S
Subject to Status and Affordability
We specialise in helping customers with a limited credit history or who may have had problems with credit in the past. To do this, we need to do some careful checks on any application we receive. All conditional offers are subject to status and affordability, and as a responsible lender we will only make you a firm offer once we have completed these checks.
Summary Resolution Letter
This is a resolution letter issued to a customer to resolve their complaint, it is issued within 3 business days from the date of the complaint. At Everyday Loans, we take customers' complaints seriously and aim to resolve complaints as quickly as possible within 3 business days, where this is not possible it can take up to 8 weeks to review your complaint.
Sustainability
This is a term commonly used by consumer credit firms in relation to whether a customer is able to maintain loan repayments over the term of the loan. Everyday Loans reviews each customer's individual financial circumstances in an attempt to understand how likely it is for our customers to sustain payments.
Statutory Interest
Sometimes when we uphold a complaint, we pay a redress amount to our customers to cover any loss or inconveneince. For specific redress payments, an interest rate of 8% is paid on qualifying payments made to these customers.
Soft Search (Quotation Search)
This is when a company accesses your credit file at a credit reference agency, usually to tell you whether they would be able to offer you credit, and at what interest rate. Importantly, soft searches aren’t visible to companies, so they have no impact on your credit score or any future credit applications you might make. Only you can see them on your report, and it doesn’t matter how many there are.
T
Total Amount Repayable
The sum of borrowed money in addition to the total amount of interest to be charged. This figure can be found on your legal agreement or pre-contract information. Early or late repayments to your loan can affect the total amount repayable. If you have an account with Everyday Loans and would like more information specific to your loan, please contact your local Everyday Loans branch.
We never charge insurance or loan processing fees. For more information, please click here: https://www.everyday-loans.co.uk/loan-Fee-Fraud/.
U
Underwriting
This is the formal process of assessing the suitability of an application for a financial product, such as a loan. This can include completing responsible checks like the ones detailed in our Responsible Lending section. If you are conditionally accepted for a loan, every lender will have their own underwriting process that they will undertake before deciding whether or not to accept a loan application. For Everyday Loans, this makes up part of our creditworthiness assessment.
Unsecured Loan
A type of personal loan that is not secured against the borrower’s property or any other assets. This means that you do not need to be a homeowner to apply. Unsecured loans are typically repaid over a fixed term with a fixed repayment figure. Everyday Loans only offers unsecured personal loans from £1,000 to £15,000.
