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Glossary

±% Pricing

±% Pricing in the secondary market is where a price is set out in terms of plus or minus a percentage on the Value today price. For example, if the Value today price is £100.00 and the ±% pricing (for example for Buy Now) is shown as +1.00%, the price will be £101.00

AML

Anti-Money Laundering

Anti-Money Laundering

Anti-money laundering is a term used to describe the legal controls that require financial institutions and other regulated entities to prevent, detect and report money laundering activities. Money laundering is the process of concealing the source of money obtained by illicit means

Annualised Rate

Interest that is calculated under the assumption that any interest paid is combined with the original balance and the next interest payment will be based on the slightly higher account balance. Overall, this means that interest can be compounded several times in a year depending on the number of times that interest payments are made. In our case, payments are made monthly so there are always twelve compounding occasions

Ann. Rate

Annualised Rate

Annual Percentage Rate

The annual interest rate that is charged for borrowing, expressed as a single percentage number that represents the actual yearly cost of funds over the term of the loan. This includes fees and charges associated with the transaction. In our case we include the flat rate loan fee, the percentage loan fee and the effect of the Compensation Scheme Fund contribution. We do not include the cost of any membership subscriptions, or optional additional services such as change in instalment plan fees, money transfer or late payment fees.

APR

Annual Percentage Rate

ARBU

ARBU is the Automated Response to Bumped-off Underbid facility for those lenders with the Advanced Lenders' membership. It allows the lender to pre-determine an automatic response to being underbid and bumped-off an auction. It inserts a new bid or bids into the auction to remain part of that loan.

Arrears

The number of repayment instalments that are past their due date to be credited in the Members’ Repayment Account. Arrears is quoted by the number of months’ payments that have been missed. Therefore a borrower who has missed three monthly instalments is three months in arrears

AutoLend

AutoLend is the facility that enables Advanced Lender members to set up parameters to determine how LendLoanInvest automatically lends their money in the Bidding or Matching Markets

Bad Debt

A loan that has entered default and has not been paid back by the borrower

Bank Base Rate

The rate at which the Bank of England lends to the discount houses, which effectively controls the interest rates charged throughout the banking system

Bidding Market

The open reverse auction market where borrowers' loan requests are visible to potential lenders to choose on which to bid to be part of the loan

Buy now

Buy Now in the secondary market is the process to trigger the immediate sale of the loan at the Buy Now price

Buy Now Price

Buy Now Price in the secondary market is a price at which the seller will sell the loan part to the buyer instantly thus terminating the auction process and then completing the sale and purchase

CCL

Consumer Credit Licence

Compensation Scheme

The Compensation Scheme is designed to protect lenders from late and missed payments, arrears and defaults by borrowers. It provides funds to lenders where there has been such a problem with a borrower's repayment. The CS offers to lenders, by subscription, an optional membership of the Compensation Scheme. The CS is not an insurance product and does not guarantee that the funds available in the CSF will cover every default.

Compensation Scheme Fund

The Compensation Scheme Fund is the fund that is built by the CS participants and used to compensate CS member lenders, if they should be so unfortunate as to suffer the problem of a borrower’s late or missed payment, arrears or even default. The CSF will be accrued from returnable contributions by borrowers, and partially from lenders' subscriptions and monthly fees

CMA

Client Money Account, the segregated or ring-fenced bank account for holding site customers' money.

CS

Compensation Scheme

CSF

Compensation Scheme Fund

Consumer Credit Licence

Under the Consumer Credit Act 1974 most businesses that provide goods and services on credit or for hire, lend money or provide debt collecting, debt counselling or debt adjusting services to consumers need to have a Consumer Credit Licence. Trading in credit activities without a credit licence is a criminal offence

CRA

Credit Reference Agency

Credit Reference

A credit reference or credit report includes information about an individual's previous credit history and is produced by the credit reference agencies to provide potential lenders a range of information about potential borrowers, which lenders use to make their decisions

Credit Reference Agency

Credit reference agencies give potential lenders a range of information about potential borrowers, which lenders use to make their decisions. The information shared may include information about an individual's previous credit history. CRAs hold certain information about most adults in the UK. This information is referred to as a credit reference file or credit report. The three main consumer credit reference agencies in the UK are Callcredit, Equifax and Experian. This site is currently using Equifax who can be contaced at:-

Equifax Ltd
Credit File Advice Centre
PO Box 1140
Bradford
BD1 5US
0844 335 0550
www.equifax.co.uk

Credit Stars

Credit Stars are the simplified method of categorising a borrower's loan request proposition used throughout this site. There are three sets of up to five stars each, for Credit Reference, Affordability and Stability. The maximum number of credit stars is therefore 15 and the minimum is zero

DCA

Debt Collection Agency

Debt Collection Agency

A Debt Collection Agency is a business that pursues payments of debts owed by individuals or businesses. Most DCAs operate as agents of creditors and collect debts for a fee or percentage of the total amount owed

Debt Repayments v Income Factor

The ratio of the amount each month that goes towards repaying all the borrower's debts, to the borrower's monthly net income. This is a key affordability measure and it is sometimes referred to as the DTI (Debt to Income) Ratio

Default

When four or more monthly repayment instalments on a loan have been missed and arrears have accumulated

Deposit

Adding money to a holding account at Lend Loan Invest. Sometimes referred to as "In Payment"

Effective Rate

The Effective Rate or the Effective Interest Rate is the interest rate on a loan or financial product restated from the nominal interest rate as an interest rate with annual compound interest payable in arrears. It is used to compare the annual interest between loans with different compounding terms (daily, monthly, quarterly, semi-annually, annually, or other). It is also called effective annual interest rate, annual equivalent rate (AER) or simply effective rate

Financial Services Compensation Scheme

The Financial Services Compensation Scheme is the UK's statutory fund of last resort for customers of certain financial services firms. This means that FSCS can pay compensation to consumers (currently up to a limit of £75,000) if a qualifying financial services firm is unable, or likely to be unable, to pay claims against it. The FSCS is an independent body, set up under the Financial Services and Markets Act 2000. The FSCS does not charge individual consumers for using the service. Please note that Madiston LendLoanInvest and other P2P platforms are not covered by the FSCS

FCA

Financial Conduct Authority

FSCS

Financial Services Compensation Scheme

FSMA

Financial Services and Markets Act 2000

HMCE

Her Majesty's Customs and Excise

HMRC

Her Majesty's Revenue and Customs

Holding Account

Where members' money is credited or debited with deposits or withdrawals. The money is held in a segregated account not forming part of the assets of LendLoanInvest but belonging to the users

Identity Checks

The checking process to verify that a member is really who they say they are

Lending Portfolio

Lenders with an Advanced Lender membership may create up to five Lending Portfolios, which will place bids automatically on Loan Requests according to parameters and settings configured by the lender

Listing Period

The period during which the loan request is open for bids in the bidding market. This period may be from 1 day to 20 days. If the loan request is fully funded the borrower may accept or decline the loan before the listing period has ended

Loan Term

The period during which repayment of the loan takes place, which can be from 1 to 60 months

Loan Payment v Available Income Factor

This is the ratio of the loan's monthly repayments to the borrower's monthly disposable income. This is a key affordability measure

Matching Engine

The mechanism that automatically matches lenders' money with borrowers' loan requests according to the parameters specified by the lender

Matching Market

The automated market where borrowers' loan requests are not visible to potential lenders, but matches are made automatically by the Matching Engine using parameters set by the lenders in their AutoLend lending portfolios

NYD

Not yet deducted (used in the lending dashboard to describe the status of fees)

Open Auction

Open Auction is the process used in the Bidding Market, where lenders “bid” different interest rates to “win” the auction.  The lowest bid wins, giving the borrower the best deal available.  These bids are all visible on the site (but not the identities of lenders or borrowers).  Think of this as an eBay for loans!

Qualifying Loans

Qualifying loans are those loan parts that "qualify" and may be sold on the secondary market. Loans that are "non-qualifying" are ones that cannot be sold on the Secondary Market and are those where:

v) an instalment repayment is due and/or will be processed during the listing period and sale process;
vi) there is, or will be at any time during the listing period and sale process, only one instalment repayment outstanding;
vii) the loan is showing an overdue or late repayment;
viii) fewer than 2 monthly repayment instalments have been made by the borrower on the loan.

Reserve price

Reserve Price in the secondary market is the price below which the seller will not sell the loan part, so bids at this price or less will be rejected with the message, “Below Reserve Price”

Value today

In the secondary market this is the value of the loan today, calculated as a net present value of the future revenue stream available from that loan, including accrued interest from the last repayment date to today

Withdrawal

Withdrawing money from your holding account at Lend Loan Invest