Payday Loans Jargon Buster

Payday Loans Jargon Buster

When looking at taking out a payday or a short-term loan there will be lots of terms which you may not be too familiar with. In this short article we will go through all of the most common terms.

What is the Annual percentage rate (APR)
This is the interest which is charged on a short-term loan. This number show the total cost of borrowing over a year and calculated daily.

What is a Payday loan
A Payday loan is a loan which is generally paid off on the next payday or within 90 days of taking out the loan. A short-term loan are small loans between £300 to £1000 and paid back over the course of between 3 and 12 months.

What is a Arrangement fee
There are a few direct lenders who will charge and arranging fee to cover the administration costs of a facilitating the loan. Not all direct lenders will charge an arrangement fee. Cashute does not charge any fees for its services.

What is a County Court Judgement (CCJ)
If you do not repay a loan the direct lender could take you to court to recover their money. If the court finds against you, they will issue a County Court Judgement Having a CCJs will most probably affect your credit rating.

What is a Credit rating
Your credit rating is a measure of your credit history or in other words your history as a borrower. Your credit history is used by lenders to investigate your past to see how you have managed your finances. All lenders will look at your credit rating to determine your suitability and if you pose a risk to them.

What is a Direct lender
When you apply for a loan you can either apply directly with the lender or you can go via a loan broker. There are benefits and drawbacks to both. If you go directly to a direct lender you have direct contact with the lender but on the other hand you will be only offered their deals.

Going via a broker you will be offered multiple loan deals and be given the choice as to which one you prefer. Once you apply for the loan via the broker you will have contact with the direct lender. So, in short going via a broker just like visiting a comparison website may be better.

What is Flexible payment
Some lenders allow this flexible payment option so that you can make payments towards your payday loan over the course a few months rather than having to repay the loan in one go. For example, Flexible payments allows you to make 3 equal payments over a 3-month period.

What are Instalment loans
Payday loans are loans which are expected to be repaid after one month or on the next payday as a one-off payment. Instalment loans are somewhat like payday loans the difference is that instalment loans are repaid over a period of months, so the loan repayments are staggered over many months.

What are Late repayment Fees
if you miss a payment or you are later with a payment you could be charged a late repayment fee. This fee is capped to £15. This price cap is enforced by the Financial Conduct Authority. Ensure that you repay the loans on-time as so not to incur any fees.

What are Lending criteria and credit checks
Any time you apply for a loan the lender will look at your credit rating along with the details you have supplied on the application form. Each lender will have their own unique criteria for determining whether to grant loans to individuals.



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