Consumer credit vocabulary

A to G

Annual percentage rate (APR)
Rate that includes all the compulsory costs involved in obtaining a loan, calculated using the equivalence method as set out in Article R313-1 of the consumer code (Decree of June 10, 2002), applicable at the date of this document. It includes:

  • the standard interest rate, used to determine the level of interest payments,
  • the percentage impact of the processing charge,
  • the percentage impact of the other compulsory costs,
  • the percentage impact of the compulsory insurance premiums or contributions.It therefore excludes the percentage impact of optional insurance premiums (unemployment insurance, health insurance, etc.).

Authorised overdraft
Right to use a credit facility as part of a lending agreement. Interest is only chargeable on the sums actually used.

Base rate
Benchmark rate set by each lending institution.

Cancellation
Termination of a contract with no impact on its prior effects.

Charges
Interest charged by a lender on overdrafts or credit facilities used by the borrower. These are calculated from the date when the funds are actually made available.

Cooling-off period
In consumer credit, the time allowed for a loan applicant to cancel the loan application after the offer has been signed (maximum 7 days, or 14 days in the case of distance selling).

Default
When the borrower no longer has the option to continue repaying the loan by instalments, following a failure to meet the undertakings laid down in the contract. The loan provider then demands immediate payment of the sums owing (capital and interest, plus penalties). The sums owing are calculated on the basis of provisions set out in the law and in the contract.
DEFAULT also refers to the failure to meet one of the obligations arising out of the credit agreement.

Deferred repayment loan
Loan in which the borrower makes no repayment for a specified period.

Direct debit authorisation
Dual authorisation given by the customer, firstly to the lender (also referred to as the "issuer" or "beneficiary"), to allow it to debit the contractually agreed sums from the customer’s bank or postal account and, secondly, to the bank to allow it to pay those sums.

Drawdown
See Authorised overdraft.

Early repayment
Repayment of the loan by the borrower before the loan’s initial term has elapsed.

Fees and disbursments
All the sums paid by a solicitor to draw up an agreement, or by a lawyer to conduct a case.

Fichier national des incidents de paiement des crédits aux particuliers (FICP)
[national payment incidents register]
Managed by the Bank of France, this is the central register that records information from all the lending institutions regarding payment incidents associated with the repayment of loans granted to individuals. It also records civil court judgements, even when the debt problem is not directly attributable to an existing loan.

Enforceability
A lender’s right to demand immediate payment of part or all of the sums owed by the debtor (e.g. unpaid amounts that have passed their term).

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H to Q

Incident or causation
Event that triggers an insurance claim : illness, accident, etc.

Lapse of rights
Period after which legal proceedings can no longer be instituted.

Leasing
Possibility of hiring an item (more specifically a car or motorbike) for a certain period, at the end of which the hirer can decide whether or not to become the owner of that item, provided that he or she has paid the rent and the amount corresponding to the option to buy.

Notice
Warning that an event is going to happen within a certain period. The term "notice" also refers to the period of time itself.

Novation
Substitution of one obligation for another.

Postponement of due date
Decision by the lender to postpone the payment of an instalment to a later date.

Prior loan offer (loan terms)
Written contract proposal issued by the lending institution, giving the borrower full information on the terms under which the loan is granted.

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R to Z

Restructuring
Renegotiation of the credit terms agreed with the lending institution. It can be recorded in a formal rider.

Revolving credit facility
A credit facility whereby the borrower has a reserve of money which, after use, is gradually built up again from the capital element included in the repayments.