A credit agreement is a legal contract between a lender and a customer that contains all the details of a loan. It will also inform the customer of all the terms and conditions that apply throughout the duration of the credit agreement.
A credit agreement is the document you sign that confirms your car finance agreement with the lender. In basic terms, it is a contract between you and the lender. The agreement states in detail that the lender will provide you with a set amount of money as a loan, and that the customer will pay back the money over a set period of time.
For example, a credit agreement would state information such as loan amount, total length of loan (term), and what interest rate you will be charged. It should be plainly stated and match all the information that has been provided to you by your Customer Advisor or lender.
The credit agreement also contains all the terms and conditions of the loan that have to be fulfilled to keep the contract valid, as well as what will happen should any of the conditions be broken. This will include what happens if you miss making your repayments, or want to cancel the agreement early.
The details of the car finance deal you are signing should be broken down into easily understandable figures. It should detail the first date of payment, how much your repayments will cost and if there are any fees associated with the deal. For example, in car finance agreements such as Personal Contract Purchase, the total balloon payment will be stated, as well as the guaranteed future value.
Something that is also often included in a credit agreement is the Direct Debit instruction. This is where you set up the repayments to go directly from your bank account to the lender.
An important part of the car finance process when working with an FCA regulated company is the SECCI form. This is a standardised form that has been designed to break down all the costs of a car finance agreement into an easy to read format. It is a legal requirement that this is provided to you before you sign any credit agreement. This is important, as it gives you an idea of all the costs and charges of a finance agreement before signing any contract. Ideal if you want to shop around and see what other lenders have to offer.
If you require further assistance, our team of Customer Advisors are here to help. We're open six days a week - you can view our opening hours here - and we're more than happy to answer your questions.