Lending and Borrowing Laws for Loans
Guest PostIf you’re considering taking out a loan, it’s important to be aware of your rights beforehand. This means becoming acquainted with the laws which govern lending and borrowing terms in the UK. Doing so will ensure that you are fully aware of the risks of taking out a loan, and will help you to understand how best to manage the financial repercussions of doing so – including what may happen if you can’t make your repayments.
Taking Out a Loan
When you take out a loan you will always be asked to sign an agreement. This agreement will set out the terms of your loan, and by signing it you will be indicating that you are both aware of and in agreement with these terms. In the UK, most lending and borrowing agreements are regulated by the Consumer Credit Act. This Act gives rights to borrowers, and dictates the terms under which lenders can provide loans. If a lending agreement is governed by the Consumer Credit Act, you will receive a written copy of your agreement which clearly defines:
- How much you will be required to repay for your loan.
- What type of loan it is.
- The terms and dates of your payments.
- What will happen if your loan is cancelled, or if you pay it off early.
Not all lending companies adhere to the Consumer Credit Act, and some even operate illegally. Therefore, if you are considering taking a loan from a company which offers loans outside of the CCA, it’s important to find out whether or not they are FSA approved. A reputable company, such as www.1ststop.co.uk, will display this information clearly, but if not you are free to request it before signing a loan agreement.
Cancelling Lending Agreements
Everyone has the right to cancel a lending agreement, providing you do so within 14 days of the agreement being agreed upon. However a lending agreement cannot be cancelled if you have already signed the agreement document, and there are certain types of loans – including mortgages – which cannot be cancelled once agreed to.
Checking the Terms and Conditions
Before you agree to a loan, whether verbally or in writing, it’s always a good idea to thoroughly check the terms and conditions of the loan agreement. This is because an agreement of this nature is legally binding and you may incur a penalty for backing out early. If in doubt, always talk to your credit provider. They are obliged to advise you in full about every point of your agreement, before you sign.