There are a lot of financial terms that are very complex, it is very hard for any reasonable person to be able to make sense of many financial terms, but this website will help you make sense of some important words which you need to be aware of before you decide to take out a loan, or if you are just glancing and comparing various loans, it is best to be familiar with some crucial terminology. Here at Paydayloanstore we’ve put together the following guide:
Understanding Pay Day loans jargon
- ACH – This is an abbreviation for ‘automated clearing house’. This is basically the system that ensures that the cash transaction is done in the required way.
- Arrangement Fee (AF) – This is usually arises where a loan provider requires a certain fee to cover administration costs.
- Arrears – This means missed payments, when you take a loan out you will be informed when you must make payments back, if you miss one, the money you owed is in arrears as you had missed the payment.
- BASC – This is often referred to by many loan providers, BASC is basically a system which is run by a group of banks/building societies to be able to process and clear money that has been transferred. This process usually takes around 3 days to clear, so when providers pay via BASC, be aware of the usual time it takes to clear.
- Cooling off period – Loan providers must comply with various pieces of legislation, the law is that you are entitled to 10 days during which you are able to decide whether to cancel the loan or not, if you decide to, you can pay back the balance without any further charge.
- Credit Scores – This is a score which helps the provider to be able to assess whether lending money to you would be a risk for them or not, therefore if you have a low credit score you are statistically unlikely to be able to keep up with various payments, therefore this is a risk for the loan provider.
- Late payment charge (LPA) – Many providers may charge you if you repay a payment back late.
- Payment holidays (PH’S) – This is when a provider will allow you not to make a payment due to the fact that there are holiday periods. This usually occurs when for example banks are not open, such as on bank holidays etc. You must check with your provider, as not all loan providers offer this service.
- Variable rate – Most APR rates usually have the word “variable” either in front or after it. This phrase means that the APR rate or other interests rates can be changed anytime, this is a common theme as not all APR rates are fixed.
The above terms are the most common phrases/words that can cause confusion.