When you’re searching for a loan, it’s normal to encounter various abbreviations, jargon and small print. It’s important to fully understand this terminology before making the decision to take out a loan – which is why at MYJAR we aim to make the borrowing process terms of our loans as clear and simple as possible.
Below are a few financial terms you should be aware of when thinking about applying for a loan:
APR (Annual percentage rate) – Sometimes also called “Representative APR”
This is a way of having a single method of comparing different loans and cards. It is based on what you would pay if you borrowed over a whole year, so it is not a very good indicator of the cost of a short term loan. The more important thing to ask yourself is, “How much money will it cost and will I be able to repay on time?”
MYJAR representative APR example:
Borrow: £100 for 30 days Interest: £24.00 One repayment of: £124.00 Annual interest 292% (variable). Representative 1270% APR.
This is a fee charged by brokers, banks and building societies to cover the administration costs for arranging forms of borrowing, such as loans, mortgages and overdrafts. Sometimes you might have to pay this fee, even if the loan is not agreed. MYJAR never charges an arrangement fee. All of our charges are set out clearly on our website.
Your credit history is an on-going personal report recording your financial behaviour, principally the way that you have borrowed and repaid money. This includes loans, catalogues, credit and store cards and even mobile phone contracts. Lenders use this information to decide who to lend to.
Credit Referencing Agency
A credit referencing agency is a company that gathers information about an individual’s credit history, including details of their borrowing and bill payment behaviour. The information kept by credit reference agencies does two things: checks your identity and determines whether you meet your loan and other commitments on time.
Debt consolidation involves taking out a one large loan to pay off multiple smaller financial commitments. The new loan will often have a lower rate of interest; the convenience of only making a single repayment a month is also an advantage of debt consolidation.
This article was brought to you by MYJAR. We're an award-winning direct lender, committed to providing clear, simple and responsible loans when our customers need us. If you need some assistance to meet an urgent financial requirement on either a short or long term basis, APPLY NOW for one of our loans.
Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk