Loans jargon buster

Need a loan but struggling to make sense of all the jargon? Don’t worry, because we’ve summed up some of the main terms you’re likely to encounter.

APR (Annual percentage rate)

This refers to the amount it will cost you to borrow money over 12 months, including interest and other additional fees, such an arrangement fee.

APRC (Annual percentage rate of charge)

This is basically the same as APR but it’s primarily talked about in relation to mortgages. Consequently, you’ll probably hear this term if you’re taking out a secured loan on your home.  APRC reflects the interest you’ll pay on what you borrow, any fees and the follow-on rate (the standard variable rate a mortgage lender offers once the term of your initial rate ends).


This is a term used for any missed loan payments you may have along the way. Arrears are essential money owed that should have already been paid.

Debt consolidation loans

This loan allows you to move all your debts into one place. The loan pays off all your existing debts, meaning you only owe money to one lender, which can make it easier to keep up with repayments and reduce the amount of interest you pay.

Early repayment penalty

If you try to pay off your loan early, you might be charged a penalty.

Homeowner loan

This is another name for a secured loan that uses a property with equity as collateral.


This is how much it will cost you to borrow the money as a percentage of the value of your loan. Depending on which loan you plump for, this might be a fixed rate for the duration you take credit out for or it could be variable.

Loan payment deferment

This is a period where you don’t have to pay-back your loan, sometimes referred to as a payment holiday. A lender might offer this at the start of your loan term but it’s not a standard practice, so be sure to check.

Logbook loan

This is a loan secured against your vehicle.

Personal loans

This is another term for unsecured loans.

Secured loans

A loan that is backed by an asset, such as your property or car. Interest on these loans are lower than personal loans but the risk is higher if you can’t keep up with repayments.

Unsecured loans

This is a loan that isn’t secured against an asset. You can choose how much you want to borrow and for how long for, but you will often need to have a good credit score to get hold of the best deals.