Glossary

APR stands for Annual Percentage Rate. It is the cost customers pay each year to borrow money, including fees, expressed as a percentage. Our APRs are tailored to individual circumstances.

The ‘balloon payment’ is more accurately known as the Guaranteed Future Value (GFV). It is a one-off lump sum paid at the end of a finance agreement to buy the car outright. The size of a balloon payment is set at the start of a Personal Contract Purchase (PCP) agreement.

All dealers offering finance are credit brokers. There are also specialist credit brokers who only provide finance, some of whom deal directly with consumers to offer a range of credit options.

Brokers often earn a commission from a lender for introducing customers.

Car finance is a credit agreement that enables a car to be bought over a period of time.

The lender will provide a loan, and the buyer will pay it back with monthly payments.

The buyer only owns the car once they have made the final payment. Different types of car finance are available, including  Hire Purchase (HP), Conditional Sale, Personal Contract Purchase (PCP), and Lease Agreement.

A County Court Judgement (CCJ) is a court order to pay back an outstanding sum of money.

If someone has a CCJ, it means the court has formally decided they owe money to someone.

CCJs are typically recorded against a person at an address and will impact their creditworthiness negatively. This will make it more challenging to get credit. At Credit Expert, we help people who have CCJs.

A credit score is a numerical rating created by several organisations representing the perceived ability of a person or organisation to fulfil their financial commitments. It is based on an analysis of their credit history and current financial circumstances.

The higher the score, the more likely it is that someone can take out a loan or car finance and at a lower rate of interest.

An organisation that collects, stores, and provides information about customers’ past and current credit history. Leading agencies are TransUnion, Equifax and Experian.

Money paid by a lender to a credit broker (which can be a dealer or credit broker) for introducing a customer to them.

A deposit is a sum paid at the start of a financial agreement or paid to a dealer to hold a proposed car purchase.

Depreciation is a decrease in the value of an asset over time. Most cars depreciate for various reasons, such as, but not limited to, age, decreased demand, damage to the vehicle or increased mileage.

Payment of the balance owing on a credit agreement, including interest, before the final payment is due. If the agreement is regulated under the Consumer Credit Act, there is a legally specified rebate that the customer must be given.

Equity is the difference between the outstanding debt owed to the lender and the resale value of a car.

Negative equity occurs when the amount owed to the lender exceeds the car’s resale value.

The Financial Conduct Authority (FCA) is the UK financial regulator. The FCA regulates Credit Expert.

The Financial Ombudsman Service is a free, fair and easy-to-use service that seeks to settle complaints between consumers and businesses that provide financial services.

A GFV applies to a Personal Contract Purchase (PCP) finance agreement, sometimes known as a balloon payment.

Set at the outset of the PCP agreement, subject to a car’s mileage, the GFV is the fixed figure that the customer can pay at the end of the agreement if they wish to own the car.

The person to whom goods are hired under a hire agreement/Hire Purchase agreement.

The fee only applies to a Hire Purchase Agreement (usually payable with the final payment) that officially transfers the title from the finance company to the customer.

The rate of interest is the amount a lender charges for providing a loan. It is expressed as a percentage of the total loan amount.

An agreement regulated by the Consumer Credit Act.

The taking back by the owner of goods, which are the subject of a credit or consumer hire agreement, is usually because instalments or rental payments have not been kept up-to-date.

Repossession Rights –  The rights of a customer and finance provider relating to when goods can be repossessed in the event of default.

Once a consumer has paid more than one-third of the Total Amount Payable, the goods are classed as protected and cannot be repossessed without a court order or the customer’s informed consent. In Scotland, a Court Order is always required.  This is detailed under the Consumer Credit Act as the ‘thirds rule’.

Please note that repossession processes differ across countries within the UK.

A representative APR must accompany all finance promotions, but it may differ from the rate a lender offers every customer.

Complying with regulation requires that at least 51% of customers accepted for credit receive a rate that is the same as, or lower than, the representative APR. Other customers may be accepted at a higher APR reflecting their credit status or not accepted at all.

A soft credit check is when a company or lender searches a customer’s credit history. Although customers can see it on their credit report, it will not be seen by the lender or affect the customer’s credit score as it is not linked to an application.