Most credit arrangements, or contracts, are covered by the Consumer Credit Code (CCC). Before a credit contract is offered, the borrower must be given a statement by the credit provider. A document that sets out the borrower’s rights and obligations must also be provided.
Some of the items which must be disclosed under the code are:
• The amount of the credit;
• The interest rate, and how it is to be calculated. If it is a variable rate, you must be told how you can check this;
• All charges and fees must be disclosed, including ongoing loan maintenance fees and default costs and fees. This must include any government fees and charges, including any stamp duty;
• Commissions paid to or by the credit provider;
• Details of any required security, such as a mortgage or a guarantee, and of any required insurance.
The contract must clearly set out what terms of the contract may be changed by the credit provider during the term of the contract, and the notice that must be given by the credit provider. These may include changes to the interest rate and changes to the repayment instalments. Where the contract sets out pegged interest changes and repayment instalments, a separate notice need not be given.
So be careful. Fully investigate any proposed credit arrangement and, if the terms are not fully understood, get professional advice before signing up.
If we at Matthews Williams can assist you on this or any other legal matter, feel free to phone me or one of our solicitors or call into our office for an appointment.
By Mark Olson