Jargon buster

The world of consumer finance can be a complex and downright scary place. Plenty of companies claim to be demystifying their services and making things easier for customers to understand, yet small print, acronyms and jargon are still common place when it comes to getting a loan.

Wonga's instant loan service has been designed to be as simple and clear as possible to use. You won't find a load of abbreviated nonsense here! But if you do encounter some financial fog elsewhere on your online travels, then our jargon buster will come to the rescue.

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AER stands for annual equivalent rate and represents the interest rate you would get if the gross interest was paid and compounded annually. It's designed to compare the annual interest between savings accounts or investments with different compounding terms (daily, monthly, annually). It doesn't generally incorporate one-time charges, such as a sign up fee.


An agreement is a decision or arrangement made between at least two groups or individuals. In the case of a personal loan agreement, it's a document that formalizes the terms of the loan between an individual and the lender. Signing a loan agreement holds you responsible for making the agreed arrangements for repaying the money borrowed, so always consider the cost and the terms carefully before completing any offer of credit.


APR stands for annual percentage rate and is the interest payable on the amount borrowed and other charges expressed as an annual rate of charge.

Arrangement fee

This is a fee charged by a company to cover its administration costs. Banks and credit unions commonly charge such a fee for arranging large loans, overdrafts and mortgages. It's basically another way of making money!


When scheduled loan or other credit repayments are overdue, you are classed as being in arrears. People who are in arrears may experience problems gaining further credit as it affects your credit rating. Or if the debt is secured against a property, it could be repossessed to clear the arrears. So it's always a serious situation to be in and worth avoiding if at all possible. Being in arrears can be very stressful, so don't bottle it up. Talk to your creditors and seek support from charitable organizations such as the Credit Counselling Canada. Employees are also commonly paid in arrears - payday is at the end of a working week or month, during which salary was being earned.


Anything you own which is of financial value is an asset, from cash to property and electronic goods to investments. If you remain in arrears (see above) for a long period of time, creditors may have the right to seize some of your assets. This is definitely the case with secured loans, which are guaranteed by being tied to your property.


The amount of money remaining in a bank account or credit facility. In the case of a bank account your balance can be negative as well as positive.


Institutions where people and businesses can invest or borrow money. Banks also offer services such as exchanging foreign currencies and insurance. The 'big five' Canadian banks are CIBC, Bank of Montreal, Bank of Nova Scotia, Royal Bank, and TD Bank.

Bank loan

Bank loans can be for personal or business use. Personal bank loans are usually for sums of more than $1,500 and you normally repay the money over a year or more. They are frequently marketed on the basis of APR, but you always make sure you understand the total to repay as well. Bank loans can involve a meeting with your bank manager and not all people are approved even if you have used other services from the bank for a long time.

Bank rate

The standard interest rate from which lenders set their rates for lending and saving products. In the Canada, the Bank rate is set by the Bank of Canada eight times per year. This rate can have a big influence on the rates offered by banks too.

Bounced cheque

A cheque 'bounces' when the bank account has insufficient funds to honour payment. In that case the bank will return the cheque, unpaid, to the account holder. The intended receiver of the money will have not been paid and this normally incurs a hefty fee from the bank.


A personal budget shows your regular income against your regular outgoings, so you can calculate the remaining balance. You can predict a shortfall of cash, or work out how much you should have left over have to either spend or save. Creating and maintaining a budget is one of the best things you can do to get in control of your finances.


Capital is often used to describe a large amount of money used for generating more wealth, such as capital invested to start a new business. It doesn't include the income or profit you get from an investment, nor the interest you have to pay on any loan or mortgage.

Cash advance

A cash advance is money provided against a prearranged line of credit such as a credit card or a loan agreement. The phrase might be used to describe a small loan made over a short period of time, compared to traditional loans which are usually taken for a year or more and can even be repaid over several decades in the case of mortgages. Wonga provides cash advances, 24/7.

Cashback mortgages

Cash-back mortgages are a type of mortgage product where the provider lends money for the mortgage plus an additional lump sum. The cash is either given as a discount on the mortgage, or added to the balance to be repaid over time. The cash can be used to pay for building work for example.

Cash flow

Cash flow, or net cash flow, is the balance of cash being received and paid by an individual or business. It is often measured during a defined period of time and can be used to determine problems with liquidity. In other words, a company can fail because of a shortage of incoming cash even while it is profitable. Similarly, an individual can get into arrears, even though their income is more than his expenditure.


Credit Counselling Canada (CCC) is the national association of not-for-profit credit counselling and government agencies that work provincially, regionally and locally throughout Canada. Only not-for-profit registered charitable organizations are accepted as association members.

Certified Cheque

A cheque drawn on the bank or credit union against either a cash deposit or money in your own bank account. A banker's draft is a secure way of receiving money from someone where cash is inconvenient or unsecure for the buyer. Certified cheques are commonly used for large denominations.

Certified Financial Planner (CFP)

A Certified Financial Planner's job is to help you sort out your finances and recommend products and services to meet your needs. They are regulated by the Financial Planning Standards' Counsel (FPSC) . Some people find CFPs helpful as they can explain the pros and cons of different financial products. Financial advisers are usually paid by:

  • commission, often a percentage taken out of the money you pay or invest, or
  • an one-off fee, usually paid direct to the adviser, or
  • a combination of commission and fee.

Charge card

A charge card looks like a credit card and allows you to spend money in pretty much the same way as a credit card. However, you must settle the debt in full each month rather than having the option of a minimum payment. Most charge card providers will operate penalty interest charges which are significantly higher than credit card interest rates if you fail to pay on time.


This is the money paid to financial institutions for the services provided. Penalty charges are also applied if services are misused or terms are broken. Penalty charges can include unauthorized overdrafts, bounced cheques and late payment fees.

Cheque cashing

If you have a cheque to cash, but don't want to wait for the bank to clear it, or you have a chequebook and simply want to borrow some money until payday, then a cheque cashing outlet will charge you a fee and provide the cash up-front. Compared to Wonga these shops are not very convenient or flexible, but they will often lend to people who might otherwise struggle to gain credit elsewhere. If you do use such a service you should be careful not to keep putting off repayment from month to month, as the fees will quickly mount.

Chip and PIN

Chip and PIN is a payment system designed to reduce card fraud. A chip and PIN card has a 'smart' chip that holds your four-digit Personal Identification Number (PIN). When you pay in a shop with a chip and PIN card, you are asked to enter your PIN into a keypad instead of signing a receipt. This PIN can also be used at cash machines to withdraw money.

Cleared balance/Cleared funds

These terms refer to types of credit - cash, cheques, electronic payments and overdraft funds - that have completed the clearing cycle and are therefore ready to access. In other words, you can only withdraw or transfer money to another account with money from your cleared balance. The cleared balance is updated during the day as payments go in and out of your account.

Clearing cycle

The process that cheques or electronic payments go through when paid into your account. Depending on the type of credit, the clearing cycle takes different lengths of time. For example, BACS and cheques take up to three days. CHAPS is a same-day payment (if made prior to 3pm).

Credit card

A plastic card that allows you to borrow money, up to your credit limit, to pay for goods and services from most companies. Credit cards traditionally charge higher rates of interest than other forms of unsecured loans from banks, but can offer good value if the balance is repaid on time each month. If you don't always pay off the amount outstanding (and just make the minimum required payments), the balance can easily spiral out of control and become harder to settle completely. There are hundreds of credit cards available and you should always do your research before deciding to apply for one.

Credit Crunch

A credit crunch, or credit squeeze, is a popular phrase used to describe a sudden reduction in the general availability of credit. It can also refer to a sudden increase in the cost of obtaining loans from banks, although both scenarios usually occur together. There are a whole range of reasons why lenders may suddenly increase the costs of borrowing, or tighten the requirements for applicants. For example, it may be due to an anticipated decline in the value of the collateral used by the banks when issuing loans, such as falling property prices, or even an increased perception of risk regarding the solvency of other banks within the banking system. It may also be due to a change in monetary conditions, such as if the Bank of Canada suddenly and unexpectedly raises interest rates or reserve requirements.

Credit balance

The amount of money in your account when you are in the black (a positive balance).

Credit Bureau

A credit bureau is a company that collects information from various sources and provides information on individual consumers for a variety of uses. This information, sometimes in the form of a credit rating (see above), helps lenders assess credit worthiness and the likely ability of someone to pay back a loan. Based on this information, lenders may refuse applications or decide appropriate interest rates for example. Some lenders charge different rates based on risk-based pricing, a form of price discrimination based on the different expected risks of different borrowers, as determined by their credit rating. Wonga charges the same simple fee structure for all applicants. Examples of credit reference agencies in Canada are Equifax and TransUnion.

Credit limit

Your credit limit is the maximum amount of money that you can borrow. This is set by the lender making an offer of credit to you. At Wonga we use a trust rating system that means your credit limit will be unique to you and will change according to how you use our service.

Credit rating

A credit rating assesses the credit 'worthiness' of an individual, corporation, or even a country. Credit ratings, also known as credit scores, are calculated from a number of factors including financial history and current assets and liabilities. Typically, a credit rating tells a lender or investor the probability of the subject being able to pay back a loan. A poor credit rating therefore indicates a high risk of defaulting on a loan, and thus leads to higher interest rates being charged, or the refusal of an application. Wonga's website provides helpful information on credit history and borrowing advice.

Credit report

A credit report is usually a document that summarizes your credit history. The information is gathered and updated by organizations like credit bureaus, banks, debt collecting agencies and retailers. It can include details of your borrowing, applications for credit, court judgments and bill payment behaviour. These reports are bought by companies to help assess applications for credit. You can get a copy of your own credit report from the credit bureaus.

Debit Card

When you pay for items or services by debit card, the money is immediately taken directly from your bank account. There's no credit involved unless you are spending on an overdraft facility.


Money owed to a person or company. You can get more advice on debt matters on our website.

Debt consolidation

Debt consolidation usually involves taking out one large loan to pay off a number of other, smaller commitments. This is often done to secure a lower interest rate, or for the convenience of having only one loan to think about repaying. It often involves converting a number of unsecured loans into one secured loan that's tied to an asset (eg. a house or car). Having collateral with which to secure a loan generally means lower interest rates because it reduces the risk to the lender.

Discounted rate

A variable interest rate that is set at a fixed percentage amount below the lender's standard variable rate for a defined period of time. At the end of the discounted period, the interest rate reverts to the lender's standard variable rate.


EAR, aside from a thing that helps you hear, stands for effective annual rate! This is the amount of interest charged on an overdraft or loan stated as an annual rate. EAR differs from APR because it does not include any additional fees or charges.

Early repayment

This is when you repay borrowed money prior to the arranged due date. Some loans do not allow early repayment, whilst others charge penalty fees for doing this. Wonga doesn't penalise customers who want to pay back their loan early and you're welcome to request an early collection any time. That way you only pay interest up to the day you fully repay the loan and can save money.

Electronic Funds Transfer (EFT) payment

An EFT payment is an electronic credit paid directly into a bank or credit union account in the Canada for a specified amount. The service is provided by the Bank of Canada and the process takes around one to three business days to clear.


In relation to the value of a company, equity will normally be divided into many equal parts which are owned by the shareholders. It also refers to one of those parts, so a director might hold a certain amount of equity in a company for example. In terms of property, equity is the value of a property after you have paid off any mortgage or other charges relating to it. Negative equity occurs when you owe more money than the property's sale value.

Equity release

A way of releasing money by borrowing against the equity in your home (see above). It usually involves extending your existing mortgage, or taking out a new secured loan against the value of your property.


This stands for exchange rate transaction fee. It's a charge you pay when withdrawing foreign currency from a cash machine or when paying for something in another currency by card. The foreign currency is converted into the bank's Canadian dollar equivalent and a fee, the ERTF, is charged for the service.

Fixed-rate interest

An interest rate that stays the same rate for a specific period of time.


The Finance and Leasing Association (FLA) is the leading trade association for the asset, consumer and motor finance sectors. Its members include banks, subsidiaries of banks and building societies, the finance arms of leading retailers and manufacturing companies, plus a range of independent firms. And of course Wonga! The services members provide include finance leasing, operating leasing, hire purchase, conditional sale, personal contract purchase plans, personal lease plans, secured and unsecured personal loans, credit cards and store cards.

Flexible mortgage / loan

A mortgage or loan that allows you to make overpayments and underpayments without penalty. In some cases, you can also take 'payment holidays' - when no payments are made at all for an agreed period.


The whole amount of a sum of cash, before any deductions such as tax or fees are made. Your gross salary is the amount you're paid before tax, Canadian Pension Plan and Employment Insurance contributions are removed for example.

Gross interest rate

Interest earned before any income tax is deducted.


Another person who guarantees mortgage or loan repayments on a borrower's behalf. A guarantor can sometimes be used to support a borrower who has insufficient income to qualify for a mortgage in their own right, or to make the loan proposition less risky for the lender.

Insurance policy

A policy that pays money to the policy holder to cover losses in the event of theft or damage to a person or property. Insurance can also cover costs such as medical or legal fees. There are many types of insurance policies covering everything from travel and buildings to cars and pets.


Interest is what you pay for borrowing money, or receive for depositing savings. It's expressed as a percentage rate over a period of time. There are various commonly used types of interest, like APR and EAR. It's important to understand what they represent when comparing financial products like loans and savings, but also vital to understand the actual cost of repaying any credit you're considering.


Describes a period when no interest is charged on money borrowed. It's common practice for retailers to offer interest-free deals on large items such as sofas or cars, to make the purchase more tempting. But always check the terms and cost of the credit when the interest-free period ends. 


A loan on which you only repay the interest, not any of the capital, in your monthly payments. The amount of capital owed remains the same and must be repaid at the end of the term.

Interest rate

This is the amount of money you pay for borrowing cash, or for depositing savings, expressed as a percentage of the amount you borrow.


An investment is something you put money, effort or time into to make a profit, or get an advantage from. In terms of money, this is usually something you pay for up-front, like a house, shares or work of art. It can also be something you put money into gradually like a savings account or pension.

Life Insurance

An insurance policy that pays money to the next of kin if the policy holder dies. The basic idea behind life insurance is that a loved one receives cash to help with funeral expenses and other costs after you're gone.

Creditor Insurance

Creditor insurance is a type of insurance policy that can provide cover to help you make repayments on a loan in certain circumstances. For example, in the event of death, terminal illness, hospitalization, sickness (disability) or involuntary unemployment.


In accounting terms, liquidity is a measure of the ability of a debtor to pay their debts when they fall due. It is usually expressed as a ratio or a percentage of their current liabilities.


Money borrowed on condition that it is paid back under the terms agreed. There are lots of types of loans, including a short term cash advance from Wonga

Loan period

This is the time for which money is borrowed, or the period over which payments are made until the loan and interest is fully settled. Another term for loan period is ‘repayment period’. Wonga loans are short term and the selected loan period can be any number of days up to a month.

Loan shark

An unregulated person or company who usually charges very large amounts of money for loans and behaves in an unscrupulous way. Repayment can be demanded via blackmail or threats of violence.


A type of secured loan used to help you buy property. The loan period is often 25 years or more and the lender has certain rights, including the right to take possession and sell the property if you don't pay back the loan in line with an agreement.

Reverse mortgage

A type of equity release product, usually for those aged over 60, which allows you to release money by borrowing against the value of your home. There are no monthly repayments, instead the interest is added to the loan and the whole amount is repaid when you die or move into long-term care, usually from the sale of the house. Because no monthly repayments are made, this means more interest will build up than with a conventional mortgage.


The amount of something after all deductions, such as tax or fees, have been subtracted from the gross amount. Your net pay, for example, is the amount of cash you receive after all tax and other deductions have been removed.

Net interest rate

Net interest rate is the rate of interest payable after the deduction of Canadian income tax at the rate specified by law . The rate of tax may vary depending on the circumstances, such as the income of an individual, so a net rate is usually only given as an example.

Nominal annual rate

The rate of interest that would apply if the interest were not added each year and if there were no inflation.


The Office of Fair Trading (OFT) is a non-ministerial government department that was established by statute in 1973. It is responsible for making markets work well for consumers by promoting and protecting consumer interests throughout the UK, while ensuring that businesses are fair and competitive. Wonga and other lenders providing unsecured loans are regulated by the OFT.

Online banking

Online banking, also called e-banking or internet banking, refers to banking services which are offered via the web. You can check your balance, order a new chequebook or set up a cash transfer for example.

Online payday loans

Payday loans which are applied for over the internet. In reality, very few companies can offer a truly online service and many require the applicant to fax or email documents or speak to someone in a call centre. Wonga is not a payday loan, but it is the Canada's only truly online loan service – with no faxing, postage or phone calls required. 

Outstanding balance

This refers to the amount of borrowed money that you still need to pay back to the lender. Your outstanding balance normally reduces as you make payments against your loan, except in the case of interest-only mortgages.


A consumer is over-indebted when he/she doesn’t have the means to meet all his/her debt payments at the end of a month. The NCA states that if a debt counsellor has completed an assessment and has reached a conclusion that a consumer will not be able to meet his/her debt commitments at the end of a month, then that consumer is over-indebted.


A bank facility enabling a customer to borrow an agreed amount (sometimes for an agreed time) against their account. Agreed overdrafts can be a very cost-effective way to borrow money for a short period of time, but unauthorized overdrafts of any amount often result in very large penalty fees, for which banks have come under heavy criticism in recent times.


Making regular credit repayments for more than you are actually required to, or occasional 'lump sum' payments. Overpayments, where permitted, are normally made in order to settle a loan or mortgage earlier than predicted. Many loans and mortgages don't permit overpayment, however, as this reduces the amount of interest the lender will ultimately collect.


This stands for per annum, meaning each year.

Payday advance

This is another term to describe a payday loan (see below).

Payday loan

A payday loan (also called a paycheck advance or payday advance) is a short term loan that's intended to cover a borrower's expenses until his or her next payday. The lender usually charges a fixed fee per $100 borrowed and the loan is made until your next payday, regardless of when you apply. Payday loans often help people who can't get credit elsewhere and have a reputation for encouraging customers to roll their loan from month to month. Used sensibly they can be a viable credit option for some.

Penalty charges

Penalty charges are a type of fee charged for breaking the terms of your banking or borrowing agreements. They can be incurred for things like unauthorized overdrafts, bounced cheques or failed standing orders.

Personal loan

Personal loans are offered by banks and other lenders to individuals for their personal use, such as to buy a car or pay for a holiday. Repayment periods typically vary from one year to five years, although Wonga offers a type of personal loan which can be taken for as little as one day.


PIN stands for personal identification number, which is a four-digit number that you enter into a cash machine or card terminal when you want to access you account or complete a purchase. For security, you should never give your PIN to anyone or write it down.

Pre-authorized debit(PAD)

An instruction from you to your bank or credit union that allows someone else to take money from your account. The amount of cash taken can vary, but you must be told of the amounts and relevant dates before the money is removed. Pre-authorized debits allow you to pay regular bills automatically for example.

Promise date

This is the date that you say you will certainly repay your loan.


Rate refers to the level of interest charged by a lender – the rate of interest. This may vary depending on your personal circumstances and some lenders provide preferential rates for borrowers they view to be a 'safe bet'. At Wonga we keep things simple and charge the same rate of interest for everyone we accept.

Redemption penalties

These are fees often charged for the early repayment of your loan, or the repayment of a loan during a period of fixed interest. They are most commonly associated with mortgages and are designed to stop customers easily re-mortgaging to take a better offer from another lender.


Also known as refinancing, is the process of changing mortgages without moving. This is usually done to switch to a new lender who is offering better terms, or to release equity. You use the money borrowed from the new mortgage lender to settle the old one. Most mortgage providers charge an administration fee and you may need to have your home revalued too.

Repayment method

Methods of mortgage repayment. The two main repayment methods are 'interest only' and 'repayment' (see below).

Repayment mortgage

A home loan where you pay back some of the capital as well as the interest each month, meaning the amount you owe is gradually reduced. To start with the repayments usually only cover the interest, but as time goes on the capital starts to reduce too.

Reoccurring Payment

A method of making regular payments directly from your bank account. The transactions are for fixed amounts on specific dates that you tell your bank.

Representative APR

Representative APR must reflect at least 51% of business expected as a result of an advertisement and takes into account other charges associated with the product (in addition to the interest rate) and will be displayed within the Representative Example.

Representative example:

Amount of credit $300 for 14 days
Total amount payable $330.00
Combined interest and fees: $30.00

Representative APR: 343.10%


This refers to profit received from activities like investing money in shares – a return on your investment.

Second Mortgage

An second mortgage made by an existing mortgage lender and secured by the first charge on the property. A second mortgage can be used for a variety of things such as home improvement, house building, purchasing freehold or personal purposes such as debt consolidation. You need equity in the property to secure a second mortgage.

Secured loan

A secured loan is a loan where the lender has the right to reclaim the loan value from an asset, such as your property or car, should you fail to keep up payments. Mortgages are the most common type. All secured loans are a big commitment and carry significant risk, but you can often benefit from a lower rate of interest. They are typically used for larger sums of money over several years or even decades in the case of mortgages. 


A unit of ownership in a company.

Share certificate

A document that shows the amount of ownership.

Share trading

The process of buying and selling shares.

Short term Loan

Short term loans are considered to be different things by different lenders. A bank for example might consider a loan of one year to be a relatively short term loan. Wonga's definition is a cash advance for up to 45 days, which you settle with one simple repayment on the date that you choose. Another type of short term loan is a payday loan, although these are a lot less flexible and potentially more expensive than Wonga. 


Another term for a share, or multiple shares in a company.

Store card

Store cards work very much like credit cards, except they can only be used in a specific store, or store group, and often involve higher rates of interest. On the plus side, they can offer you discounts and other benefits while shopping at that store. They're sometimes confused with loyalty or reward cards, which can be used anywhere.


This refers to the movement of money. For example, when you pay money into or take money out of a bank account. It can also refer to a purchase in the case of a transaction with a shop.


Trust is confidence in the honesty, goodness, skill or safety of a person or thing. Trust is one of the founding principles behind Wonga. Our Trust Rating system means that, as you gain our trust via your responsible use of our service, we gradually raise your credit rating and give you more borrowing flexibility if you ever need it.

A trust is also a legal arrangement in which a person or organization controls property and/or money for the benefit of another person or organization. This arrangement is often used for children so that adults can control their financial arrangements until they reach a certain age. Trust can also refer to an organization that has responsibility for such a legal arrangement.

Unauthorized overdraft

An overdraft that is higher than your bank or credit union has previously agreed to is classed as an unauthorized overdraft, and usually carries large penalty fees.

Uncleared balance

The amount of money in your account including all the uncleared items in your account and any items paid in during the day.


A loan or mortgage payment that is less than the amount that you should normally pay on a specific date. You may be able to arrange underpayments for a short period with some lenders, if you are unable to pay the full amount for a valid reason like losing your job.

Unsecured loan

An unsecured loan is a loan when the lender does not have immediate rights to reclaim the loan value from an asset, such as your property, should you fail to make payments towards the loan as agreed. An unsecured loan is still a serious commitment and there will be significant penalties if you fail to repay it. Wonga cash advances and most other personal loans are classified as unsecured loans.

Variable-rate interest

An interest rate that you pay on your loan or mortgage that can increase and decrease. These fluctuations are usually in line with a stated index, such as the Bank Rate set by the Bank of Canada.


A slang term for cash or money, used in the UK and especially in London ("A whole lotta wonga"). From the Romany word wanger (coal) - coal was sometimes used as a casual term for money in England in the 18th and 19th centuries.

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