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What is a debt consolidation loan?
A debt consolidation loan is where you take out a loan to pay off existing debts. So in effect you are lumping together all your existing debts, clearing them with a debt consolidation loan and then making just one payment a month to clear the outstanding balance.You may find that you save money too, as taking out a 9% APR loan to clear a credit card with a balance accruing interest at 16.5% APR makes sense. There is also the psychological factor of only having one monthly repayment to manage rather than lots.
What is a prime lender?
Prime lenders are suitable for people who have an excellent credit history. Prime lenders typically offer the lowest interest rates and the lowest fees for borrowing, subject to you meeting their criteria. If you have late or missed payments on other credit within the last six years, it is unlikely that you will be accepted by a prime lender. If you do get accepted and your credit history is less than perfect, then you will probably pay a few percent more than your contemporaries with an excellent history.
What is an early redemption penalty?
An early redemption penalty is a financial penalty that you have to pay should you settle lending such as a loan or mortgage early. When looking for credit, it makes sense to check out the early redemption clause. That way you can see how much you could be liable for should you decide to pay off the borrowing before the end of the agreed term.
What is a credit record?
A credit record is basically a record of all the credit you have had in the last six years. It shows how much you have borrowed and whether you have missed any repayments etc. A credit record allows potential lenders to see your financial history so that they can decide whether to lend you money.The data on your file is complied by credit reference agencies such as Equifax and Experian. They use information from public records (e.g. electoral roll information, court judgments etc) and from lenders and financial institutions: e.g. credit accounts, credit applications).
What is a bad debt?
A bad debt is borrowing where the money has not been paid back subject to the terms and conditions of the lending agreement. A debt tends to become ‘bad’ where it is unlikely that the creditor will be able to recover the money.Having a bad debt on your credit file will make it harder for you to borrow money in future.