Just so you don't get confused by unfamiliar terms we have compiled a glossary full of phrases that you might come across in your dealings with loans.

• Adverse credit - somebody with a history of abusing credit or failing to keep up credit agreements will be referred to as having an adverse credit history. People who have county court judgements (CCJs), have become bankrupt, have mortgage arrears or have made late payments on any credit arrangement can all be described as having adverse credit.
• Application - a statement made by the consumer detailing their personal data and financial situation used by the lending company to make a considered assessment.
• APR - this stands for 'annual percentage rate' and is a figure representing the amount of interest you will be charged on your loan in addition to any further charges.
• Arrears - this is a term used to describe the amount that a borrower is behind in their agreed repayment plan, usually measured by either money or time.
• Bad credit - see adverse credit.
• Collateral - see security.
• Credit agreement - an agreement between the lender and borrower outlining various terms and conditions. This will need to be signed before the borrower receives their loan.
• Credit reference agency - these private companies are used by loan providers to make individual assessments. They keep credit records of all individuals and businesses. The two main credit reference agencies in this country are Experian and Equifax.
• Defaults - this term is used to describe the failure of an individual to keep up payments on a mortgage according to their agreement.
• Fixed interest rate - this type of interest will remain the same throughout the term of the loan.
• Over-repayments - this term is used to describe the making of payments over and above those outlined by the loan repayment plan.
• Payment protection plan - this is a type of insurance that can be taken out with a loan that will protect your loan payments in the event of illness, disability or redundancy. You do not, however, need to take out this type of insurance with your loan provider. Income protection insurance or payment protection insurance can be procured from most insurance providers and performs the same job.
• Secured - this type of loan requires property or collateral to be put up against the loan. This collateral will then be at risk if payments are not kept up as agreed.
• Security - also referred to as collateral, security is the term used to describe assets or property put up as security for a loan. The lender will be entitled to reclaim the assets as compensation if repayments are not kept up.
• Term - the loan term is the length of time over which you agree to repay your loan.
• Under-repayments - an under-repayment is a loan repayment that falls below the amount agreed in the loan repayment plan. Often lenders can arrange for borrowers in financial trouble to make under-repayments until their situation improves.
• Underwriting - this is the term used to describe the assessment of an individual or business for a loan and approving the loan.
• Unsecured - a type of loan that requires no assets to be put up against the loan. The only requirement is usually a good credit record, but interest rates are typically higher than those on secured loans.
• Variable interest rate - a type of interest rate that is subject to fluctuation and change (either higher or lower than the initial percentage) due to market forces.