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Personal Finances
Jargon Buster
We've made it easy to
understand the terms used in this site. Look below for simple
explanations.
Introduction
Current accounts help you to manage your day to day finances. You can
arrange to have your wages or salary paid directly into your account and
regular bills like pension payments and car insurance can be settled
straight from the account every month. Monthly statements help you to keep
track of your spending too. The Royal Bank can usually supply cheque books
as well as Highline cards, so your money is always within easy reach. And
most current accounts even pay interest on your money when you're in
credit, so you can be saving without even knowing it.
Interest
Just as we pay interest to you when you deposit your money with us, we
charge interest when you borrow from us. Depending on the type of loan,
the interest rate can be fixed for the whole period, or it can vary. Flat
rate loans allow you to budget more easily because you always know what
your repayments are going to be. See the example below:
Loan Protection
You can protect yourself in case you are unable to make your repayments.
You pay a little extra each month so that if you’re made redundant during
the period of the loan, or suffer from ill health that stops you working,
your loan repayments will be covered until you’re able to work again. Loan
protection means you don’t have to worry that your family will be saddled
with a debt that they can’t pay. So you can have peace of mind knowing
that everything will be taken care of.
Typical working example of a loan
In the real world, you can use your extra cash to buy almost anything you
like. From a new car to a new kitchen, from course fees to short term
finance, a loan makes it easier for you to live the lifestyle you want.
You can often borrow up to 100% of the purchase price and the repayments
can usually be spread over a number of years. The example figures below
give you a rough idea of what you might expect to pay.
|
Amount
of loan |
Period
of loan |
Total
amount |
36
Monthly repayments with Creditor Insurance (Payment Protection) |
Fixed
APR % |
|
£5000 |
36 months |
£7,042.32 |
£195.62 |
15.5% |
Glossary
The following is a glossary of the Loans and Borrowing terms:
|
Glossary |
|
Bonds |
Life
assurance lump sum savings plans. |
|
Annual
Percentage Rate (APR) |
To help
you make a meaningful comparison between the different interest rates
on offer, all lenders are obliged by law to use a standard method of
calculating and displaying 'APR'. APR is an interest rate which takes
account of the full amount of interest on any money borrowed plus the
timing of repayments and any other charges that you have to pay. The
frequency of the interest payments, for example monthly or quarterly,
affects the calculation. By way of an example, a loan for £1,500 with
an arrangement fee of £15, repayable over 24 months with interest
being charged quarterly at 15.5% would give an APR of 17.5%. (All APR
figures must be written bold type.) |
|
Effective Annual Rate (EAR) |
When we
let you borrow money by way of an overdraft, the real annual cost of
the interest charged may be shown as an annual rate taking account of
how often interest is charged. All other charges for the borrowing,
for example arrangement fees, have to be listed separately. As an
example, if interest is charged at 1.50% per month, this is equivalent
to an EAR of 19.56%. |
|
In-principle |
This is a
decision we give providing agreement to the loan subject to additional
criteria being met. |
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Maximum Advance Premium |
The
maximum advance premium (MAP) will be incurred for any mortgage which
is in excess of 90% of the purchase price or valuation, if lower. The
premium will be charged on the amount of the loan above 75% of the
purchase price or valuation, if lower. |
|
Repayment period |
This is
the period that the loan is spread over. |
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