Loan glossary

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C.


Capital.

The assets of an individual less their liabilities.

This occurs when a borrower makes a lump sum reduction to the amount owed.

In financial services, the period after signing a contract during which customers are entitled to cancel their purchase of some financial products.

Where a company provides an employee with a company motor car which is used privately in addition to company business, a tax liability may arise which will depend on a number of factors including salary and motor car details such as cost, age, engine capacity etc. Income shown on payslips for car allowance is not normally used to support income for loans applications.

Money, in the form of notes and coins, which constitutes payment for goods at the time of purchase.

A sales incentive, commonly used on mortgages, which gives customers a cash sum as soon as the mortgage completes.

Clearing House Automated Payment System. This is a method of clearing cheques in banks in the UK.

A financial benefit paid by the government to parents. It is tax free and is not means tested. We cannot usually use this to support an income multiple.

An asset used to secure loans against.

Commercial loans are loans for businesses. A commercial secured loan would be a type of mortgage secured on non residential building. Semi-commercial buildings for example would be a pub that has residential rooms upstairs.

The point at which the loan is executed and all of its conditions come into effect. For the purposes of an unsecured loan, it is when the funds are paid out to the client.

Secured lenders require this to be completed by any occupier of the secured property who is over 17 years old and is not party to the mortgage. The form waives the persons right to residency so that if the lender seeks to obtain vacant possession in the event of repayment default, the person cannot remain in place. It annuls squatters rights.

Common mis-spelling for "consolidation", see below.

The term awarded to the inclusion of a debt to the capital of a newly proposed loan. Consolidation loans are very popular as often merging all debts together in one loan can make repayments easier.

The act regulated the sales of secured and unsecured lending under £25,000, excluding loans for property purchases. Regulation covers the administration of a loan through cooling off periods and action allowed to recuperate losses from defaults.

During a cooling-off period the client cannot be contacted. The client can contact the lender or broker, however the lender or broker is only permitted to respond directly to clients questions. Cooling off or consideration periods were introduced by the Consumer Credit Act 1974 and permits the borrower to take time to consider the proposal before completing a loan.

A adverse unit registered against a person by a local civil court in England which is presided over by a judge.

A term used to describe an amount of money lent by an organisation to a person.

An organisation that maintains a database on the credit history of data subjects in order to advise lenders and other interested parties of matters relevant to the status of the prospective client.

A plastic card which enables a person to purchase goods without the means for cash. Credit card consolidation is one of the most popular reasons for a consolidation loan.

A person or a company who lends money to another person or company. Many people who apply for our consolidation loans, for example, have several creditors that they owe money to.

A technique which awards points to certain aspects of a clients circumstances e.g. time in employment, time in property etc. It can be used to assess the degree of risk exposure relating to a particular lending situation. Financial institutions rely on highly computerised credit rating systems, and co-operate with each other in providing details of bad credit risks. Hence the concept of the black list or black listing or being black listed.

A technique which awards points to certain aspects of a clients circumstances e.g. time in employment, time in property etc. It can be used to assess the degree of risk exposure relating to a particular lending situation.

A fairer, more subjective way of assessing the degree of risk exposure relating to a particular lending situation. It does not award points but returns details of historic credit etc. The repayment history of the credit can be assessed and used as an indication as to how future repayments may be made to new lending proposals.