Secured loans – A Glossary
You should always enter into any financial decision with your eyes wide open and know exactly what you are undertaking.

When you’re investigating whether secured loans are the right financial solution for you, you will come across a barrage of financial terminology. Below is our simple guide to some of the key terms you will find.

Administration Fee

If you pay off a product early in the loan sector, than administration fees are widely used. A good example is if you repay your mortgage early, the lender can charge a one-off administration fee for closing down your account.

Annual percentage rate (APR)

This describes the interest rates you will be charged. The APR shows how much you will be charged on your mortgage, loans – secured or unsecured - or credit cards over the year.
Often there are bargains and deals for products that are appealing in the short term but APR includes all costs and is a more accurate way to ascertain how much you will have to pay on your borrowing. Often people with secure financial history and good credit are offered lower APRs to those with bad credit.

Arrears

If you fail to meet your repayments on secured loans, or any financial service you have purchased, you will go into arrears. If you fail to pay, for example, for three months then you will have three months’ arrears against your name.
This is recorded in your financial and credit history, and can be seen as a negative point if you apply for financial products in the future.

Cancellation Period

Otherwise known as a ‘cooling-off period’ this is the amount of time you are allowed in which to withdraw from purchasing a financial product or service.
This period and terms and conditions will be outlined in your contract and will vary from product to product.

Credit History

This will outline your financial history and how you have managed credit – for example mortgage or secured loans repayments. Credit history will show if you have any arrears in your past. It will also bring up any serious debt such as bankruptcy.
This can be difficult if you are trying to purchase new financial products or services or raise credit. Bad credit history could incur the risk of being refused by a mainstream lender.

Debt Consolidation

This is a way of getting rid of all your existing loans with one single new loan. It can help reduce monthly repayments by spreading the loan over a longer period or reducing the interest rate.

Repayment period

This is the length of time agreed to repay secured loans, mortgages or any other financial product. It will include interest added on to the agreed sum of money loaned.
It depends on the kind of loan on how long the repayment period will be. Secured loans and mortgages usually deal with larger amounts of money and will have a longer repayment period than unsecured loans. Your repayment period for secured loans could be, for example, 25 years.

Loansum is a specialist broker that searches the market to find low rate secured loans that are right for you. Call us on Freephone: 0800 848 8046 to find out how we can help you or email help@loansum.co.uk.

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