Personal Loan Terminology Glossary

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Personal loans can be confusing. At Shawbrook, we’re committed to being fair and transparent with everyone that applies for a personal loan.

When looking for a personal loan you may come across some confusing jargon, so we’ve put together a useful guide to help you better understand some of the most common personal loan terms.

You can browse our A-Z list of terms below.


Acceptance rate: the percentage of applicants who are successful in their application out of the total that applied for a loan.


Annual percentage rate (APR): the annual cost of taking out a loan expressed as a percentage. This is shown to help you to compare products such as loans or credit cards. To find out more about APR on loans, read our article about what APR is.


Arrears: when you do not keep up with your monthly repayments or a payment is overdue, you may ‘fall into arrears’. The amount of arrears is accrued from the date of when the first missed payment was due.



Car loan: a personal loan for purchasing a new or used vehicle. To find out more, visit our car loans page.


Coronavirus scams: fraudulent emails or text messages that use the coronavirus pandemic to try to trick you into giving confidential details or money. For more information on this new type of scam activity, visit our guide on how to protect your finances and stay safe online.


Consumer Credit Act 2006: an act of Parliament that increased consumer protection when borrowing money, extending the scope of the Consumer Credit Act of 1974.


County Court Judgement (CCJ): a type of court order in England, Wales and Northern Ireland that may be registered against you if you fail to pay an outstanding debt. A CCJ will affect your credit rating and could result in refusal of credit. Details of the CCJ will remain on a credit file for 6 years.


Credit check or credit search: when a company such as a lender, contacts one of the main credit reference agencies to obtain details of your credit history. This helps them to understand your financial behavior. Lenders need to do this before they can process your application.


Credit file or credit report: a record held by a registered credit reference agency displaying your credit history. It details how much debt you currently have and how you’ve managed it in the past. Lenders will refer to this when assessing your borrowing application. You can request a copy of your credit report by using a credit reference agency.


Credit score or credit rating: a 3-digit that lenders use to help assess what type of borrower you are and how likely it is that you will manage your repayments. A poor credit score (a lower number) could indicate that you may not have managed credit well in the past and could affect your chances of acceptance when applying for a personal loan.


Credit reference agency (CRA): a company that holds your credit records and passes on information to lenders to help assess your affordability and credit rating. The main CRAs are Experian, Equifax and TransUnion.


Credit search footprint: the record left by a credit reference agency every time your credit file or credit report is searched by yourself or others. Also known as a ‘search footprint’. It includes enquiries, which are related to casual quotations, and application searches, which usually only happen when you are applying for credit. At Shawbrook, when you apply for a quote we’ll use a soft credit search leaving a footprint only visible to you. When you apply for a loan, a hard credit check will be carried out, leaving a footprint visible to other lenders which can impact your credit history.



Debt consolidation: the process of combining multiple debts into one. Typically, this is achieved by taking out a credit card or a debt consolidation loan.


Default: ‘to default on a payment’ - failing to keep up with loan repayments. This can affect your credit score and reduce the chance of future successful credit applications. If you can’t make payments on time, it’s important to contact your lender to discuss your loan terms.


Default notice: a formal letter which is usually sent after three to six missed payments. It should include the type of agreement, the terms that have been broken and what you’ll need to do and by when. Failure to comply with a formal default notice could result in a default being recorded on your credit file and this usually lasts for six years.



Early repayment charge or early redemption charge: the amount of money a lender may charge if you decide to pay your loan off earlier than the agreed term of the loan. If you’re considering paying a loan off early, make sure you check your loan agreement or contact your provider to best understand these charges.


Eligibility criteria: factors used to determine whether a person is eligible for a personal loan. Eligibility criteria will vary for different lenders. In order to apply for a personal loan with Shawbrook, you’ll need to be aged 21 - 75 years of age, have been a resident in the UK for a minimum of 3 years, have a minimum annual income of £15,000, and own a UK personal bank account. For more information about Shawbrook’s eligibility criteria, read our guide on how to get a loan.




Financial Conduct Authority (FCA):  UK financial regulator with the power to introduce and enforce rules which govern the UK’s financial services industry. The FCA’s role includes protecting consumers, keeping the industry stable and promoting healthy competition between financial service providers. All credit lenders and brokers must be authorised by the FCA to continue to do credit business in the UK.

Fixed rate: a set rate of interest that doesn’t go up or down during the period of the loan.



Gross income: how much you earn before tax is deducted.



Hard credit search: when a lender takes a full look at your credit report. Most hard searches stay on your report for 12 months and will be visible to other lenders. When you ask for a quote for a personal loan with us, we’ll only do a ‘soft credit search’ unless you decide to apply. These searches are only seen by you and not other lenders. For more information on credit searches, read our guide.


Home improvement loan: a personal loan for funding a home improvement. This can be used to help fund a new kitchen, bathroom, loft conversion etc. To find out more about Shawbrook’s offering, visit our page on home improvement loans.



Interest rate: the cost of borrowing money, expressed as a percentage of the total amount of credit. It is the amount the lender or bank charges to borrow its money. Depending on the type of loan this can be fixed or variable.



Joint application: an application made by more than one individual. For example, a married couple or civil partners may choose to complete an application together.



Lending criteria: basic requirements that you must meet before you’ll be eligible to apply for a loan. For example, your age, income and residential status - these can differ depending on the lender.

Lender: the organisation responsible for providing the loan. Shawbrook Bank is an example of a lender.


Loan agreement: a contract between you and the lender which outlines the terms and conditions of the loan. For example, it might include details of the loan, repayments, and terms.


Loan calculator: an online tool that allows people to calculate how much money they will pay back as interest on a given loan, usually based on the lender’s Representative APR. As not all loan calculators are based on a personalised quote, they can be misleading and applicants may not get that rate. To find out more about loan calculators and why we don’t use them, visit our guide on the accuracy of loan calculators.


Loan purpose: the reason why you’re choosing to take out a loan. For example, this could be to buy a car, make a home improvement, or consolidate existing debts.


Loan term: the agreed period of time that the loan will be repaid.



Monthly repayments: the amount of money paid every month to the lender to pay back the loan which includes interest and any applicable fees.



Payment deferral or payment holiday: a pause or reduction in loan repayments that is agreed in advance with your lender. For customers who have been financially impacted by the coronavirus pandemic, some lenders have offered a payment deferral. If you have any queries about payment deferrals, talk to your lender. If you’re a Shawbrook customer and are experiencing financial difficulties, please get in touch. For more information, visit our support page


Personal loan: an amount of money to be borrowed and repaid over an agreed period of time.


Price for risk: the method lenders tend to charge different rates of interest depending on an individual’s credit score. If you are deemed to be higher risk because of how much credit you already hold or how you’ve managed credit in the past, then you may be offered a higher rate compared to someone with a good credit score and strong credit file.



Quote: an estimated price. This can differ from the advertised Representative APR as a quote is usually based on your own personal circumstances.

Before you formally apply for a loan with Shawbrook, providing you are eligible, you can get a quote and  we’ll provide you with a guaranteed, personalised rate up-front, so you can consider it before making a decision.



Regulated: being controlled in line with rules and guidance from the regulators and by relevant legislation. 


Repayment schedule: an outline of when a borrower needs to make their repayments set out over an agreed period, based on the loan term and the amount of money borrowed.


Representative APR: the rate that a lender will offer to at least 51% of their successful loan applicants. As it’s just an example, you need to bear in mind that this may not be the rate you’ll get if you apply and you could get a rate that’s either lower or higher than the Representative APR. Find out more in our Transparency research.


Representative example: an example of the typical costs associated with the product being advertised which is based on the lender’s Representative APR. If a lender includes any reference to the cost of credit when advertising unsecured credit products like a personal loan, they must show a Representative Example in a prescribed format. This is to help you compare the products across different lenders.



Scam: a dishonest way of getting money. This could involve phishing emails, fake texts, or selling fake or nonexistent items. To find out how to protect yourself against threats like this, visit our guide on how to stay safe online.


Search footprint: See ‘Credit search footprint’.


Secured loan: a personal loan that is secured on your home or another asset. This means your home will therefore be at risk if you fail to keep up with repayments. It is typically used for larger amounts. Also known as a homeowner loan.


Soft credit search: a type of credit check that won’t affect your credit score. These searches are only seen by you and not other lenders which provides you with the freedom to shop around and compare financial products from a range of providers. Some lenders will only carry out a hard credit search so make sure you check before applying. At Shawbrook, when you ask us for a quote, we’ll only carry out a soft credit search unless you decide to go ahead.



Total amount repayable: the whole sum of borrowed money in addition to the total amount of interest and fees charged.



Underwriting: assessing the creditworthiness of a potential customer and deciding whether or not to accept their application for a loan.


Unsecured loan: a type of personal loan that is not secured against the borrower’s property or any other assets. This means that you do not need to be a homeowner to apply. Unsecured loans are typically repaid over a fixed term with a fixed repayment figure. 



Variable rate: a type of interest rate that can change over the course of the repayment term.



Wedding loan: personal loans used for funding some or all the costs of a wedding. They may be used to cover the ceremony, reception or other costs like the wedding dress or honeymoon. To find out more, visit our dedicated page for wedding loans.





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We’re committed to being fair and transparent with everyone that applies for a personal loan. When you apply for an instant quote, it won’t impact on your credit score and we’ll give you a clear picture of your guaranteed and personalised rate from the start.

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