It’s no coincidence that the Swedish translation of ‘Klarna’ is ‘clear.’ We want to be simple and transparent in everything we do – because life is complicated enough already. Being smoooth means being crystal clear, so here are some common pieces of financial jargon that sometimes confuse people.
Essentially an instruction from you to your bank or building society. It authorises the organisation or recipient you want to pay to collect money from your account. The bank or building society then transfers that money on a date agreed by you and the recipient.
Short for Annual Percentage Rate, APR represents the amount of interest you'll pay annually on any money borrowed. APR can include the interest rate as well as any charges. All financial products that let you borrow money must show the APR rate so you can fairly compare products. APR is calculated the same way by all lenders.
When you apply for a financial product, lenders will often review your credit score. This is based upon your history of handling credit and can encompass things like mobile phone bills, previous credit cards, if you’re on the electoral roll and a variety of other factors.
Simply put, this is when you borrow money from a bank or another lender and it is not tied to an asset for security. If you miss a payment on an unsecured loan, a lender cannot repossess any of your assets. Whilst they are unable to seize assets, some lenders may take legal action such as a County Court Judgement if repayments continued to be missed.