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ANNUAL PERCENTAGE RATE (APR)
A measurement of the total cost of borrowing money. Comparing APRs can make it easier to make fair comparisons between loans from different companies.

ARREARS
Is the sum of any unpaid installments, along with any fees and interest, when you fall behind with agreed monthly repayments on a loan.

CLEARED FUNDS
Funds which have been paid into a bank account (by cheque, debit card, standing order, bank giro credit or any other means) which have not been returned unpaid in accordance with a bank's instructions over payment clearance times.

CONSUMER CREDIT ACT
The Consumer Credit Act (1974) is the law which requires lenders to be licensed by the Office of Fair Trading and which also sets appropriate standards for the format and content of agreement forms and for the advertising of credit.

CREDIT AGREEMENT
Is the contract signed between a lender and a borrower which sets out the terms and conditions of the loan.

CREDITORS
Individuals or organisations to whom you owe money.

DEBT MANAGEMENT PLAN
An arrangement between a debtor and a Debt Management Company (DMC) whereby the DMC will negotiate with creditors on the debtor's behalf to agree and fairly distribute their disposable income to the creditors on a pro-rata basis.

DEBTOR
An individual who owes money to another individual or organisation.

DISPOSABLE INCOME
The amount of money left available to you after your living expenses have been taken off your net monthly income.

EQUITY
Is the difference between the value of a property and the amount of any loans or mortgages secured upon it.

GROSS INCOME
The amount paid to you by your employer BEFORE tax, National Insurance and all other deductions have been made.

INTEREST
Money charged by a lender on an amount owed to them. An INTEREST RATE is the percentage at which interest will be charged on a debt. Interest may be calculated on a daily, monthly or annual basis and is often expressed as an APR - ANNUAL PERCENTAGE RATE.

INDIVIDUAL VOLUNTARY AGREEMENT (IVA)
A formal type of debt repayment plan based on a legally binding agreement you make with your Creditors to repay your debts. IVAs may involve disposal of certain assets depending on your individual circumstances. IVAs require the appointment of a licenced Insolvency Practitioner. In Scotland Trust Deeds are offered in place of IVAs.

JOINT AND SEVERAL LIABILITY
If you have taken out a credit agreement with another person then you are BOTH liable for the FULL amount of the debt (i.e. it is not shared out between you). This means that a creditor can look to either of you individually to repay the total indebtedness. You are therefore liable for the debt jointly and individually.

MORTGAGE
A loan which has been secured on property - most commonly the debtor's home.

NET INCOME
Your income AFTER all due taxes and National Insurance has been paid.

OFFICE OF FAIR TRADING
Is a government body responsible for ensuring fair trading. It aims to protect consumers by ensuring that trading practices are as fair as possible and one of its responsibilities is the administration and enforcement of the Consumer Credit Act 1974. Any business planning to provide consumers with credit facilities, or refer them to a source of credit, or hire out goods, must first obtain a consumer credit licence from the OFT.

REPOSSESSION
If the borrower is unable to maintain repayments on a secured debt, the lender has the right to repossess or take over the property and sell it to get their money back.

SECURED DEBT
Borrowing you have taken out which is secured against a specific item or possession owned by you. The most common example of a secured debt is a mortgage on a home.

SETTLEMENT FIGURE
Is the amount required to repay a loan early. Lenders usually issue settlement figures in writing. They take into account all charges, interest and payments due.

TERMS AND CONDITIONS
The regulations which govern an agreement. Before entering into any agreement you should ensure you are aware of the terms and conditions and how they affect you and your rights.

TRUST DEEDS
Only available in Scotland. The Scottish variant of an Individual Voluntary Arrangement.

UNSECURED DEBT
Borrowing which is NOT secured against a specific item or possession owned by you. Common examples of unsecured debts are most personal loans, overdrafts, credit cards and store cards.