We understand that dealing with money can be confusing on its own, without even attempting to understand what some of the terminology means. This is why we recently started a series that looked at some of the more confusing terms that are used when it comes to talking about debt.
As a company who specialises in helping people beat their debt by providing manageable debt solutions in Scotland, we often have to explain to people what these different words mean. This is why we thought it would be easier to put them all together in a helpful guide.
In the first post we looked at key terms such as APR, Debt consolidation, and priority debts – explaining what they were and how they relate to the world of debt.
Read on for part two of our essential debt jargon buster!
Arrears is the term used when you miss a payment. If you are falling behind on payments for bills such as your rent, mortgage, utility bills, or credit cards – you will be referred to as being in arrears. This means that you owe money that was due to be paid at an earlier date.
Compound interest can be both a good and bad thing. If you have borrowed money, then compound interest can be added on to the amount you owe – meaning you will have to pay back significantly more money over a short period of time. (This is the bad kind of interest)
However, if you have a savings account, compound interest means you are earning interest on top of interest. (Instead of paying interest, you are earning it)
Cooling Off Period
Whenever you sign a document that is linked to anything financial, you should always read it carefully. You may notice a section that says you are entitled to a cooling off period. This simply means that you have a specific amount of time to change your mind about what you have just signed, before you are bound in a contract.
A secured loan is one that comes attached to something, generally using your property as a guarantee that you will repay the money. If you don’t manage to pay the loan back in full, or you repeatedly miss payments – the lender has the right to repossess your property (take it away).
Unlike with a secured loan, this is money that borrowed from a lender that doesn’t include putting it against your property. If you fail to pay back a unsecured loan, the lender has the ability to take you to court over it.
We hope this has helped tackle some of them confusing terms that often pop up when dealing with money issues. If you are having financial issues, or suffering from debt, and you’re not sure what solution is best for you, we have you covered.
Debt Advisory Services (Scotland) Limited have a dedicated professional and experienced team that can help advise you on the best way to clear your debts. We can tailor our debt management plans to suit your individual needs, by sitting down and discussing what help you need.
Please contact us by ringing 0800 011 2322 and a member of our team will be happy to help you out.