Lending Glossary

A - D, E - H, M - P, Q - T, U - X

Annual Percentage Rate (APR)

The total cost of a credit facility, expressed as an annual percentage of the amount of credit granted. It takes into account the interest rate charged and any other fees.

Arrears

Arrears occur where you fall behind with regular payments (for example, monthly mortgage or loan payments), or do not pay the correct amount required. In certain cases, surcharge interest may apply to the amount of arrears. (refer to Surcharge Interest)

Cost of Credit

Cost of Credit is the difference between the amount you borrow and the total you will repay including the interest by the end of the loan period

Credit Search

This is where the Bank obtains credit references from a credit reference agency or agencies to enquire on your credit history.  This may influence your ability to obtain credit.

Debit Interest

This is the amount you pay to borrow money and is added to the loan or overdraft.  The rate is the amount charged

Default

Where a borrower misses one or more repayments on a loan on the due date(s) or otherwise breaks the terms and conditions of the agreement, they are in default.

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ECB (European Central Bank)

The European Central Bank (ECB) is the central bank for Europe's single currency, the euro.

Facility Fee

This is a fee charged by a financial institution for arranging an overdraft on a customer’s account. See Overdraft.

Overdraft

An agreement with your bank to spend more money than you actually have in your account. An agreed overdraft is the limit up to which you may borrow from the bank, when there are no funds in your current account. Your bank must normally approve an overdraft in advance. If you do not have overdraft permission the bank may still allow your account to go into overdraft but may charge an unauthorised overdraft fee.

Payment Protection Insurance

If you chose to purchase Payment Protection insurance, this covers your repayments on a loan / mortgage / credit card if you suffer from an accident, illness, death or redundancy.

Personal Loan

A loan that is granted for personal use.  It is usually unsecured and based on your ability to repay.

Principal

The sum of money borrowed from the lender – generally what is owed, not including the interest.  This is also known as capital.

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Referral Item Charges

These charges apply when cheques, withdrawals, direct debits and standing orders are presented for payment on your account and, when paid, place the account in an unauthorised overdraft position.

Security

Also referred to as collateral, security is an asset(s) belonging to you which you have assigned to the Bank.  The Bank has the right to sell or apply the asset(s) towards payment of the debt in the event that you default on the borrowing.

Surcharge Interest

This is additional interest that is charged on unauthorised borrowings on loan, mortgage and overdraft accounts and is payable for example (a) if there is no agreed overdraft limit on your current account and you overdraw; (b) if you exceed your authorised overdraft limit without prior arrangement with the Bank; (c) if the account remains overdrawn after the limit has expired;

Term of Loan

The agreed period of time for the customer to make full repayment of the loan.

Top-Up Loan

An additional amount of money lent to an existing borrower, increasing the amount owed of the existing loan.

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Uncleared Effects

When cheques, drafts or other non-cash items drawn on other financial institutions are lodged to your account, they are shown in the balance of your account although the Bank has not received value for them. Until the Bank receives value, these items are known as “uncleared effects”. You may not be able to withdraw these funds until they are “cleared”. If you do you may be liable to pay Uncleared Interest on any amount withdrawn.  

Uncleared Interest

If you withdraw funds from your account for which the Bank has not received value (i.e. a cheque has not cleared), then you may be subject to uncleared interest being charged on the amount withdrawn.

Variable Rate

This is an interest rate that may rise and/or fall over the period of the borrowing.

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Legal Notice

The information provided in this guide does not constitute tax, legal, investment or any other advice.

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