The Consumer Credit Act 1974 (amended in 2006) is a UK legislation that regulates financial services providers and helps protect consumers from illegitimate purchases.
Compromised of over 190 sections, the Consumer Credit Act 1974 covers a broad range of areas. Below are a few key examples of credit law covered by the legislation, that helps to protect finance customers.
When it comes to advertising credit agreements, the Consumer Credit Act 1974 has strict rules to ensure customers get an accurate idea of the type of credit offer and the costs involved.
For example, all consumer credit advertisements must use plain language and be easy for readers or listeners to understand.
If an interest rate is mentioned, finance providers are also required to provide a representative APR that relates to the advertised rate. Additional information including the sum of credit, any fees or charges, and the total amount repayable must also be provided.
The Consumer Credit Act 1974 commands that certain information must be provided to you before you enter a credit agreement. This should include:
The finance provider must also provide full details of your credit agreement including the following:
The Consumer Credit Act 1974 also gives finance customers the right to a 14-day cooling-off period. This means if you change your mind after entering a finance agreement, you have 14 days to cancel your agreement and get your money back.
The cooling-off period begins the day after you start your contract with the business. If you choose to cancel your agreement within this 14 day period, the finance provider must refund all transactions and you must return any goods received.
However, if the business has provided services to you during the cooling-off period, they are entitled to charge you for the cost of the services.
If you wish to cancel your agreement after the 14-day cooling-off period, the Consumer Credit Act 1974 enables you to end your agreement through voluntary termination. However, the legislation states you must have repaid at least 50% of the total amount owed before you can withdraw from the agreement.
If you have not repaid at least 50% of the outstanding finance, you are required to make up the difference before you can terminate the agreement.
If you wish to pay off your agreement early, the Consumer Credit Act 1974 confirms you do not have to pay the full amount of interest specified in the agreement. Instead, you are entitled to a statutory rebate which reduces the total cost of interest.
To find out your settlement figure, you’ll need to contact your credit provider and tell them you’re looking to end your agreement early. Your lender is then required to provide you with a settlement statement within seven days of receiving your request.
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