Securing a loan is a complex transaction that consists of different operations to be performed like knowing the track record of the lender, the amount that has to be borrowed, terms and conditions and the benefits associated with it. Only when all these details are known the loan that is acquired will be a safe and secured one. If you fail to understand the complete details regarding the loan, it may cause a legal offense that costs a lot. So it is vital that the borrower gains the complete knowledge about the loan laws before securing it. The general laws that are associated with loans are;
- Repayment period: The primary thing that has to be noticed by every borrower is the repayment period of the loan. Some financial institutions are known for gaining higher profits by making the borrower’s commit to longer repayment terms that will have higher rate of interest extending the burden of repaying the loan. It is advisable to have shorter periods that will be easier to pay back and relieve yourself from the financial imbalances.
- Rate of interest: With competition between the various lenders currently on the market some are offering lower interest rates and also zero per cent interest on balance transfers. Research on such institutions and become knowledgeable of the best offers that are available. There are even lower interest rates assigned if the loan amount is paid early such as partial early repayment or full early repayment. This concept has to be cleared from the lender as to whether it is available or not.
- Data Protection Act 1998: According to this act the complete information that is held by the bank or the lender will be utilised only for the purposes that are registered under this act. This includes provision of the financial and banking service, mortgage lending services, marketing and securitisation. The borrower needs to confirm whether the information that is provided is true and can be used for necessities only.
- Fees and charges assigned: There is a possibility the lender has all rights to impose additional fees and charges or modify the charges that are already imposed on the contract. These fees will be debited directly from the borrowers account and they will be notified later after the transaction is completed. This notification has to be received by the borrower for which the lender can be asked to notify beforehand of such modifications.
- Effects of missed and delayed payments: Most of the lenders do not remind the borrower’s of the due date as it is considered their responsibility to pay the bills on time. If this is not kept in action then there will be necessary actions taken such as imposing penalties, marking bad credit history in the records etc.
There are different kinds of loans such as personal loans, payday loans, business loans etc., it is important to have knowledge on such laws before securing any of these loans.
