- Dealing with typical situations
- Borrowing money and buying on credit
- What you can expect from your lender
What you can expect from your lender
Your lender must meet a set of lender responsibilities to you throughout your loan. There are also certain things a lender must tell you before you enter into a loan.
- make enquiries to check that the loan is suitable for your needs
- make enquiries to check that you can afford the loan
- help you to understand the key terms of the loan before you enter into it
- ensure the loan agreement is not oppressive and that they do not treat you oppressively.
Your lender must check whether the loan is suitable for you
- the amount of credit you need
- the purpose of the loan – for example, you may need the loan for a sudden unexpected short-term cost (such as an air ticket or medical costs) or to make a planned long-term purchase, such as a household appliance or a car – different kinds of loans can be better in different situations
- whether you will need any flexibility attached to your loan (for example, you may wish to be able to change how often you make your payments, or to re-borrow any amounts that you repay)
- whether you want to be able to pay off lump sums during the loan
- whether the loan will include extra products, for example loan insurance, extended warranties or repayment waivers.
Your lender must check whether the loan is affordable for you
What does “without suffering substantial hardship” mean?
Your lender also needs to check that you can make payments without having to sell goods you did not intend to sell when you signed up to the loan.
- your income (for example, what you earn, how regularly you get paid and how long you have been in your job)
- your expenses (for example, what you pay for accommodation, food, childcare costs, and debts)
- your credit history and whether you are likely to be in a position to repay the loan.
Your lender must help you to understand your loan
- clearly highlight the key features of the agreement (for example, by providing a copy of the agreement and circling key features while explaining them, or ensuring key features are highlighted clearly on an online loan application) – key features you should look out for include the term of the loan, interest rates, fees, the repayments you will need to make, and whether security is being taken over anything else you own
- give you plenty of time to fully consider the loan (for example, by giving you information to read off-site, and the time to consult with another person)
- provide access to an interpreter or information in another language, if you do not have a good understanding of the English language.
Take your time and do not sign up to an agreement unless you are really clear about it.
What information does a lender have to provide?
How does a lender have to provide this information?
- giving a disclosure statement to you in person
- posting a disclosure statement to your last known address or
- emailing or faxing a disclosure statement to you (as long as you have agreed to this and the information remains readily accessible so that it can be referred to again at a later date).
When does a lender have to provide this information?
- Initial disclosure must be provided when the contract starts.
- Continuing disclosure must be provided during the term of the contract.
- Variation disclosure must be provided when the contract is changed.
- Request disclosure must be provided when you ask for it.
- Guarantee disclosure must be provided to anyone guaranteeing the debt.
- 4 working days after it’s been sent by post, or
- 2 working days after it’s been sent by fax or email.