Glossary
We are keen to avoid jargon but sometimes it’s just unavoidable so here are explanations of some of the terms used on the site. Please let us know if you come across any other terms that you think we should include here.
i) an instalment is due and/or will be processed during the listing period and sale process;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.
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 and the percentage loan fee. We do not include the cost of any optional additional services such as change in instalment plan fees, money transfer or late payment fees.
Arrears
The number of repayment instalments that are past their due date. 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.
Bad Debt Relief
It is now possible to offset losses suffered on unpaid peer to peer loans against interest earned on other peer to peer loans. This referred to as Bad Debt Relief.
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
Bank Account Verification
One of the security checks conducted by Madiston LendLoanInvest is the Bank Account Verification where a small amount of money is deposited in a bank account with a reference number that needs to uploaded to the site to confirm bank account ownership.
Change Instalment Plan
Change Instalment Plan (CIP), enables borrowers to pay a lump sum to repay the loan in full.
CMA
Client Money Account, the segregated or ring-fenced bank account for holding customers' money separately from the company’s or site’s money.
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 enable credit decisions to be made about potential borrowers.
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. Debt Collection Agency
A Debt Collection Agency is a business that pursues payments of debts owed by individuals or businesses.
Debt Repayments v Income Factor
As a responsible lender, we review loan applications to assess affordability. Debt Repayments v Income Factor is a key affordability measure and it is sometimes referred to as the DTI (Debt to Income) Ratio. It is the ratio of the amount each month that goes towards repaying all the borrower's debts, to the borrower's monthly net income.
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 Madiston LendLoanInvest. 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 or annual equivalent rate (AER).
Financial Services Compensation Scheme
The Financial Services Compensation Scheme (FSCS) is the UK's statutory fund of last resort for customers of certain financial services firms. The FSCS can pay compensation to consumers (currently up to a limit of £85,000) if a qualifying financial services firm is unable, or likely to be unable, to pay claims against it. Please note that Madiston LendLoanInvest and other P2P platforms are not covered by the FSCS.
Holding Account
Where lenders' or borrowers' money is credited or debited with deposits or withdrawals. The money is held in a segregated account not forming part of the assets of Madiston LendLoanInvest but belonging to the individuals themselves.
Loan Term
The period during which repayment of the loan takes place, which can be from 12 to 60 months
Loan Payment v Available Income Factor
As a responsible lender, we review loan applications to assess affordability. Loan Payment v Available Income Factor is a key affordability measure. This is the ratio of the loan's monthly repayments to the borrower's monthly disposable income.
Personal Savings Allowance
From 6 April 2016, if you're a basic rate tax payer, you'll be able to earn up to £1,000 in savings income tax-free and higher rate tax payers will be able to earn up to £500 tax-free.
Qualifying Loans
Qualifying Loans are those loan parts that "qualify" to be sold on the Secondary Market. Non-qualifying Loans (can't be sold on the Secondary Market) are those where:
ii) there is or will be at any time during the listing period and sale process, only one instalment repayment outstanding;
iii) the loan is showing an overdue or late repayment
iv) fewer than 2 monthly repayment instalments have been made by the borrower on the loan.
Secondary Market
Lenders may request to withdraw funds early that are already committed in loans. Subject to 1) the availability of “Qualifying Loan” slices to the value of requested withdrawal and 2) lenders available to buy them, these loan slices will be put up for sale on the Secondary Market to satisfy the withdrawal request.