Money Jargon - The Letter A

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Money Crocodile knows the finance world is full of terms, phrases, buzz words and jargon. The below terms will help you with terms beginning with the Letter A

On this page we explain,
ABI > Ability to Pay > Added to Loan > Adverse Credit > AER > Affinity Card > APR > Arrangement Fees > Arrears > Application Form > Apportionment

ABI

The Association was formed in 1985 when a number of existing industry bodies joined together. The creation of the ABI meant that all sectors of the insurance company market could now speak through a single organization.

The ABI is funded by the subscriptions of member companies. it is the trade association to which most UK insurance companies belong. The Association speaks out on issues of common interest; helps to inform and participate in debates on public policy issues; and also acts as an advocate for high standards of customer service in the insurance industry.

Association of British Insurers, or the ABI, are the trade association to which most UK insurance companies belong. One of its functions is to monitor quality and decide common areas of interest so that good standards of customer service can be maintained.

Ability to Pay

The term ability to pay means simply just that, before borrowing finance you should check you have a sufficient income to meet any repayments. A simple way to ensure you have sufficient income to meet your obligations is to compare your outgoing expenses against your incoming.
When agreeing to an application the lender is taking a risk that the information you provide is accurate and that you will repay your end of the obligation. When you apply for finance your obligation is to provide honest information.

Added to Loan

There are usually costs involved when arranging finance and normally these costs are added to the overall amount being borrowed. These costs may include things such as indemnity fees, arrangement fees and administration fees.

Adverse Credit

County court judgments, mortgage defaults, loan arrears or other credit repayment problems are recorded on a persons financial record and may lead to a poor credit rating. Adverse Credit is a term used to describe a poor or low rating in credit scoring. If you move address frequently, are not registered on the electoral register or have defaulted on any credit payments then your credit score will be adversely affected.
Credit scoring is used by lenders to determine the level of risk they would be taking should they grant you credit. Your credit history is recorded on national databases and can be examined by any potential lender.
You could still find finance to suit your score even if you have a problem credit rating, there are plenty of lenders who specialise in lending to people with adverse credit ratings.

AER

AER is the abbreviation for “ annual equivalent rate” is a rate generally quoted on the interest paid on savings or investments.
It's used to illustrate the full percentage cost of overdrafts and any type of account that can be in credit and also go overdrawn.
The calculation shows you the true cost if you use the overdraft facility.
APR applies to a pure lending product whereas EAR applies to a product, such as a bank current account, that can be in credit or go overdrawn.
Used in advertising products it demonstrates what the return would be if the interest was paid annually.
Most interest earning savings accounts quote an AER, allowing you to compare the return you may expect to get. Remember however that the AER is only a notional rate and will not necessarily reflect the cash return you will receive.

Affinity Card

Affinity cards operate like ordinary credit cards. However, they are linked to a particular good cause, which may or may not be charitable. An Affinity Card is offered by two organizations, jointly. One is a credit card issuer and the other is a professional association, special interest group or other non-bank company which benefits financially from card use.
Some charities offer cards operated by credit card issuers, that make a small payment towards the charity each time you use the card. There could also be a donation when you initially take the card out.

APR

APR stands for annual percentage rate and means the total cost of any finance taking into account all the costs, interest charges and arrangement fees. The APR is usually expressed as a percentage amount. The higher the APR the greater the repayments will be.
Showing the APR is a legal requirement and all lenders of finance have to make it clear to borrowers what their APR rate is. You could be charged a greater APR rate if your credit history is poor.

Arrangement Fees

Arrangement fees is the term used to describe the charges from lenders to cover any setting up costs that finance products generate. Most UK finance products including loans, mortgages, insurance, credit cards and consumer credit come with arrangement fees. The actual amount charged can vary greatly from lender to lender and is dependant on the financial product, you should take into consideration and compare arrangement fees when searching for finance.
Arrangement fees are usually included in the over all amount borrowed for any mortgage, although this is a standard practice some lenders do advertise mortgage products where the fees are waived or cancelled in order to attract new customers.

Arrears

Arrears is the term used to describe missed or late payments that are due on financial products. Continuous arrears on repayment could end up with a County Court Judgement (CCJ) being brought against a borrower. CCJ's will make it hard for a borrower to obtain any future credit.
If you have been in arrears for some time you are known to have 'Defaulted' on payments.
As soon as you find you are having difficulty with repayments you should contact the lender of the finance product immediately, they may be able to help you in your situation. By working together a repayment schedule could be arranged. This would be tailored to your ability to pay and thus reduce the probability of creating further arrears. Most finance lenders have departments or sections that can assist customers with arrears and defaults.

Application Form

Application forms are a written application in the guise of a form. All relevant details and information can be viewed easily and most financial needs can now be arranged online quickly and easily.

Apportionment

Apportionment is the sharing of specific costs between buyers and sellers of property. Often a forgotten cost, you should make sure you only pay for the buildings utilities during the period in which you occupy it. Each party should pay their fair share on the date the properties sale is completed. Your conveyancer will sort this detail out for you.

Apportionment can also be a term you come across when you become a unit-holder or buy a flat with shared common areas. Costs involved in the upkeep of the shared areas should as gardens, stairs ways etc are financed between the unit-holders.