What is a variable rate? A variable rate is a form of interest rate that can rise or fall depending on market conditions, and affects the amount you will earn in interest on your savings, or pay in interest on the money you borrow. A variable rate will traditionally track either stock market performance, inflation, the consumer prices index or the Bank of England base rate but can track any index as determined when you take out the loan in the first place. What is a variable rate mortgage? The most common form of variable rate loan is a variable…

What is insurance? Insurance is a very broad term which has many meanings, especially in the financial industry. In short, an insurance product is designed to protect a user in case something goes wrong with the particular product, or situation they are trying to insure against. Customers can take out insurance for their car, home, pets, when they go on holiday, their life, against critical illnesses and for a huge range of other situations and products. Why do I need insurance? The reason you need insurance will vary based on the item or situation you are trying to insure. In…

What is repayment? When you take out a loan, credit card or mortgage you’ll need to start paying back the money you have borrowed. This is referred to as your repayment and is usually carried out on a monthly basis. If you were to borrow a fixed amount of money, they your repayments will be worked out over the period you have borrowed the money for, and will be the same each month. Example Pete borrows £10,000 at 5% over a three year period. He’ll need to pay the £10,000, plus an additional £789.52 in interest. This will then be…

What is a loan term? A loan term represents the period of time over which someone borrows money, and can range from a few hours to hundreds of years. Some loan terms are preset and not open to negotiation, while others can be chosen to suit your individual budget and the amount of money you can afford to repay on a monthly or annual basis. Typical Loan Terms Most loans have a typical loan term. A payday loan has a typical loan term of 30days, although some customers may just borrow the money until their next payday, which could be…

What is Bankruptcy? Bankruptcy is a method of saying enough is enough, I owe more money than I can possibly pay back and I’m never going to be able to pay it all off. You file for bankruptcy and the creditors you owe money to will take everything you do own, and make as much money as they can from it but the rest is wiped clear, and you start again with a fresh slate. Sounds too good to be true, why doesn’t everyone do it? Declaring yourself bankrupt is no simple matter and there are a lot of negative…

What does APR stand for? APR stands for Annual Percentage Rate and is used to describe the rate of interest charged by a lender to a customer taking out a loan, credit card, mortgage or other financial product that involves borrowing money. Lenders traditionally use an annual rate of interest because it is easier to compare than a monthly one, and has been used as a standard by the finance industry for many years. What’s the difference between Nominal and Effective APR? You will find when looking to borrow money that some lenders will talk about a nominal APR, while…

What is a credit rating? A credit rating is a rating given to nearly every adult who holds a bank account in the UK and gives a reflection of their ability to borrow money and to pay it back on time. There are currently three major credit agencies in the UK, Equifax, Experian and CallCredit. They hold information on your credit situation, and will know about any overdrafts, credit cards, loans, mortgages and credit contracts you hold. They also have details of your address, where, if anywhere you are registered to vote, and the amount you have repaid of all…

I’ve got an average credit rating at the moment but I’d like to make it better. What steps can I take to improve my credit rating? Your credit rating is a number between 1 and 999 that rates your ability to manage and repay credit. It is used by companies who are lending you money, or letting you have something on credit and every mobile phone contract, loan, mortgage, credit card and finance deal that you take out will look at your credit rating as part of their decision to lend you the money. Many lenders will offer customers with…

What is a credit rating? In the UK nearly every time we look to borrow money the people we are borrowing money from will look at our credit rating. It’s a score which represents our ability to borrow and repay money and is recorded and provided to people searching by three main credit agencies. Those agencies record details of the addresses we live at, the money we borrow, and the way we pay back that money. They will have details of where we are registered to vote, and any late payments we have made in the past. They use all…