Loan eligibility, loan calculator and other loan terms explained

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At Bamboo, we know that the amount of different terms that get used when we’re talking about loans and borrowing money can get a little bit confusing. What’s the difference between loan eligibility and loan calculator? What’s the difference between interest and total payable? What about the difference between CCJ, APR and ERC?

Confused yet?

You’re not alone.

Thankfully, they’re pretty easy to get your head around when all of the jargon is cut out.

So we’ve done just that.

A breakdown of the most common loan terms – from loan eligibility to credit report – spelt out in plain English.

APR:

APR stands for Annual Percentage Rate and is a really useful term to get to grips with. Unlike interest rates – which only show the percentage interest you’ll pay on top of the repayments –

APR shows you how much you’ll have to pay back in total. It takes into account everything from interest to fees and service charges to give you an overall idea of how much it costs to borrow.

It also makes it easier to compare products, like for like. If you’re looking to borrow the same amount from different lenders, the APR will tell you which lender is cheaper over the course of a year.

CCJ:

CCJ stands for County Court Judgment and is, at its simplest, a judgment from your local court that allows lenders and creditors to reclaim money they’re owed.
It’s all a bit complicated, but it’s all about the court deciding as to whether the outstanding debt has to be paid. If it does, they’ll issue you with a CCJ.

CCJs stay on your record for six years and affect your credit score, so it’s best to avoid them whenever possible.

Cooling Off Period

This is a period of time during which you can cancel your loan and repay the full balance without a penalty charge.
You can cancel your agreement with Bamboo Ltd and return the full outstanding balance within 14 days, starting on the day after the loan was granted, without it costing a penny.

Credit file

A credit file is a report that has all the information on your credit and borrowing arrangements. You’ll probably have heard of Experian, Equifax or Callcredit – these are all credit reference agencies that hold information on your credit file.

Your credit file is what lenders assess when considering a loan application.

Credit report:

Credit report and credit file – for all intents and purposes – are the same thing. Technically, the credit file contains all of the raw data and the credit report is the thing lenders and credit agencies read, but unless you’re thinking of becoming a lender, you don’t need to know that.

In most situations, if somebody uses credit file or credit report they mean the same thing – all of the information on your credit and borrowing history.

(You can find out more about credit reports, files and history in our guide to credit scores.)

Credit reference agency:

Credit reference agencies – like Experian or Equifax – are the companies that compiles all of the credit records. You have the right to ask for a copy of your credit report from these agencies (but sometimes they charge you to do so).

Credit search:

Before your application is processed, a lender will contact the credit reference agency to check to details of your credit history and if you’ve got any current lines of credit.

Data Protection Act

The Data Protection Act is a law that protects all of your personal information. As lenders, we’re legally not allowed to pass your private information to anybody outside of the company without your permission.

ERC (Early Repayment Charge)

If you repay your loan early, some companies charge an Early Repayment Charge (ERC).

At Bamboo, there’s no Early Repayment Charge if you want to pay your loan back early.

Fixed rate:

A set rate of interest that cannot change, no matter the circumstances.

Fixed Sum Loan Agreement

This is a written statement which provides you with the details of the loan and specifies the terms agreed to and signed by all parties. This includes the amount of the loan, how the money will be paid back, over what term, the interest rate and APR and the date the monthly payments are to be made.

Late Payment Charge

A late payment charge is a fine imposed by a lender on a borrower when the borrower fails to make payment on the agreed dates.

Loan eligibility:

Loan eligibility, in a nutshell, is whether or not you’re a suitable candidate for a particular loan. This is done by performing a loan eligibility check.

Loan eligibility check:

A loan eligibility check runs a soft-search on your credit file to check that you’re a suitable candidate for the loan. It doesn’t affect your credit score in any way.

Secured loan:

Sometimes known as a homeowner loan, secured loans use the borrower’s house as security against the amount borrowed.

Total amount repayable:

The total amount that a borrower will repay at the end of the loan period. It considers the original loan plus all interest and fees. (It doesn’t consider any unforeseen circumstances like missed payment fees, though.)

Typical APR:

Typical APR is the advertised rate that is offered to at least two thirds of all successful loan applicants. However, that means that there is a possibility that you might be offered a different interest rate, depending on your circumstance. The APR you see advertised isn’t always the one you’ll get.

Unsecured loan:

A loan with no guarantor where the lender has no entitlement to any of the borrower’s assets in the event of the borrower failing to make the loan repayments.

Variable rate:

A rate of interest which can go up or down with the Bank of England base rate. (If the base rate rises, the lender can increase its variable rate of interest.)

Hopefully, now you know your loan eligibility from your late payment charge. If you’re still a bit unsure, why not give us a call on 0330 045 0490 – one of our team will be more than happy to talk you through every question you might have.

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