Glossary

An acceptance fee is a fee sometimes incurred at the start of a finance agreement. Lenders use it to cover the cost of various administrative duties. Moneybarn does not charge an acceptance fee.

Approved in Principle is when we've initially accepted you for finance, so you are ready to purchase your car, but we just need to complete the final few forms in order to fully approve your finance.

APR stands for Annual Percentage Rate. APR aims to help borrowers compare credit costs. The APR calculation takes into account interest and other charges (e.g. set-up fees) but does not include default charges or default interest for missed or late payments.

A broker is a middle man between you and a finance lender. For example, Moneybarn are a lender, but we also work with brokers.

The cost of credit refers to the total credit costs on top of the amount you have already borrowed. It is the total cost of credit and any fees charged over the term of the loan or finance agreement.

A county court judgment - or CCJ - Is a type of Court Order that can be filed against your name if you fail to repay money you owe. It outlines how much money you owe, who the money is owed to, and the deadline for when the money is to be repaid.

Credit Reference Agencies (or CRAs) are companies that create and maintain credit reports for individuals. They gather information about your credit history, and put this into a credit report and calculate a score for you. In turn, lenders will ask one or more of these agencies for information before accepting your credit application. There are 3 CRAs in the UK - Experian, Equifax and TransUnion (formerly Callcredit).

A credit agreement is the agreement made between you and a lender.

A credit score is a score given to you by a credit reference agency based on your history of paying back previous and existing debts. This is then used by finance lenders to help determine whether you are likely to repay a debt.

Typically, when you apply for credit, a finance lender or broker will do a credit search to look for financial information relating to you. Moneybarn will initially use a soft credit search, so we can provide you with a decision without it impacting your credit score; only once you proceed with a full credit application will the credit search show on your file.

A creditor is the company who provides finance to you. For example, Moneybarn is a creditor.

A debtor is a person or company who owes money to someone else. For example, if you took out finance from Moneybarn, you would be the debtor.

In the event that you miss a payment, a lender can charge what is referred to as default interest. This default interest is charged on the amount of arrears you owe, until you are up-to-date with your payments.

A default notice is a formal letter that is sent by a lender, informing what action you need to take to bring your account up to date. Normally you are given a minimum 14 days to take the action stated in the notice.

A deposit is the cash amount that you put down against your car. It is deducted from the amount that you borrow to pay for the vehicle.

Depreciation is the term used to describe the loss in value of your car as it ages. It is the difference between what you paid for it and what it is worth now.

We use this term when talking about your monthly outgoings during our application process. Looking at your expenditure is one of the checks we need to carry out to make sure a potential credit agreement with us is affordable for you. What we mean when we use the term ‘discretionary expenditure’ are costs or outgoings that are not essential to the running of your home or business, e.g. money you’ve spent on a dinner out or a cinema trip.

The Financial Conduct Authority - or FCA - is a regulatory body that supervises and regulates all the financial service providers in the UK.

A fixed rate refers to the rate of interest that you pay. With a fixed rate, the interest rate is set in advance - before you take out the loan or finance - and it remains the same throughout the term of the agreement.

Interest rate determines the amount of money you are charged for borrowing money from a lender. It is typically expressed as a percentage and is charged on top of the amount you have already borrowed.

This means the maximum amount of finance we’re able to lend to a customer, which they will need to pay back in monthly instalments plus interest over the term of the agreement.

This means the maximum amount a customer will need to pay each month for the duration of the finance agreement.

Monthly bureau commitments (or Monthly credit commitments) are fixed monthly outgoings that are found on an individual’s credit report which they are committed to pay, such as other loans.

Net income means the amount of income an individual has left each month after all deductions, e.g. income tax and national insurance. It’s often referred to as an individual’s ‘take-home pay’.

We use this term when talking about your monthly outgoings during our application process. Looking at your expenditure is one of the checks we need to carry out to make sure a potential credit agreement with us is affordable for you. What we mean when we use the term ‘Non-discretionary expenditure’ is the essential costs you incur, such as rent or mortgage payments, council tax, utility bills (e.g. gas, water and electric), other basic living costs (e.g. food, drink, toiletries, cleaning products, insurance, healthcare (prescriptions, lenses etc.) and vehicle costs like road tax. When we’re checking your outgoings to see if you can afford an agreement with us, it’s the ‘Non-discretionary’ expenditure we need take into account, as those costs are likely to be regular and necessary for you to maintain.

A part exchange is an agreement whereby your old car is taken in exchange for a reduction in price on the new vehicle.

A quotation search - often called a soft search - is a type of credit search. Unlike a full credit search, a quotation search does not leave a trace footprint on your credit file. It is used by some lenders and brokers to initially determine whether they will be able to offer you credit.

Repossession of the car is what may happen if you fail to make all the required repayments. This only happens after a Default Notice is served, and then the lender still needs to apply to the court for a repossession order. However, a lender can repossess your goods without a court order if you have repaid less than one-third of the value you borrowed.

Representative APR refers to the APR that the majority of customers (i.e. 51% or more) will get if they apply for finance. However, the actual APR can depend on your credit rating and individual circumstances.

The residual value is the value of your car at the end of your loan or finance agreement.

A secured loan is where an asset is used as equity against the loan. For example, car finance is secured on the value of the car and, therefore, if your repayments are not kept up then the lender can repossess the car.

A soft search is also referred to as a Quotation search.

Before you can start an agreement with us, we need to check that the agreement is likely to be affordable for you. To do this, we will source information from a range of trusted third-parties who hold average and statistical data about the typical expenditure of people who live in the UK. For example, a key source is the Office for National Statistics (ONS) - the UK's largest independent producer of official statistics and the recognised national statistical institute of the UK. We can then use this data as part of our decision-making process to determine whether we are able to lend to a customer.

The total repayable refers to the total figure that the debtor owes to the creditor. It is made up of the original loan amount, as well as the total cost of the credit - e.g. interest and any other fees.

“Utilities costs” means the bills you need to pay to your utility providers, typically your gas and/or electric provider, and water provider.

Variable rates refer to the rates that interest is charged at for your loan or finance agreement. A variable rate changes in line with a rate that is agreed beforehand, for example, the Bank of England base rate is often used.