Credit agreements and the law

In Great Britain personal and secured loans are subject to the Consumer Credit Act 1974 legislation. The overall aim of this act is to protect borrowers by providing strict regulations regarding the lending of credit. It is worth noting, however, that the current act covers secured loans up to the value of £25,000. Amounts above this are unregulated!

What happens in practice?

Before taking out a secured loan the borrower is asked to sign a credit agreement, this applies even if you apply online for loans. Such documents are usually long and contain small print, therefore, read very carefully. The credit agreement document is an extremely important and should adhere to strict formats as laid down by the Consumer Credit Act 1974. Sadly there have been cases where some credit agreements issued by lenders have not met the criteria laid down by Consumer credit Act, such as incorrect customer details or loan interest calculations. In such circumstances, it is worth noting that credit agreements can be verified by experts to ensure legitimacy. Agencies who can help in these situations include the Citizens Advice Bureau and Financial Agreement Solutions. Before seeking advice, however, check to see whether any fees are payable for such information.

For piece of mind reputable lenders are normally very approachable in the respect of explaining their credit reference agreements and should be able answer any questions.