subject: Ending A Credit Agreement [print this page] The CCA (Consumer Credit Act) ensures that consumers have the right to end a loan early by giving notice to the lender and repaying the loan in full. New rules dictate exactly how the outstanding loan amount has to be worked out, so that people are not taken advantage of by the loan companies. Moreover, consumers are able to reclaim the charges for the credit once taxes, duties and charges have been deducted as stated in the Consumer Credit Act
When the lender calculates the amount of the repayment due they use the date 28 days after they received notice from the consumer of their intention to end the loan agreement Under s.97 of the Consumer Credit Act borrowers have the right to request detailed information about this calculation and they need to receive it in 12 days. If this requirement isn't met, then the debt is not enforceable until this is provided.
Termination of Hire, HP and Conditional Sale Arrangements
With Hire Purchase (HP) and Conditional Sale Arrangements the contract whenever the customer chooses. However, there is a requirement for al least half of the loan amount to have been repaid and the goods have been looked after. For hire arrangements the contract can only be terminated after eighteen months or earlier if stated in the contract.
For Those Not Familiar: Credit Agreements Explained
1 Credit Sale Agreements
This type of agreement is usually used for high-priced purchases such as expensive computer equipment, boats and the like. It is essentially a loan for the purchase price of the item with the debt being paid back over a fixed period of time in equal monthly installments. The consumer may pay a deposit, plus there might be nothing to repay for the first couple of years. In both cases, the goods will belong to you as soon as you have entered into the agreement, even though you may have paid nothing. If an agreement is promoted as being interest free, there will be a time specified in which you have to repay the full amount, or the outstanding balance will form part of a new longer term agreement where you will have to pay interest.
2 Conditional Sale Agreements
The Conditional Sale Agreement is like to the Hire purchase arrangement already described. The difference is you don't own the items until you have paid all the agreed installments. In addition, there can also be other conditions which have to be met before the goods are yours.
3 Hire
This is the hire of goods in return for a monthly payment. You never actually own the goods and have to either start a new hire agreement when the current contract or return the goods. If you can't pay or return the items before the end of the agreement you can be taken to court for the outstanding amount.
4 Hire Purchase
Under HP agreements, you pay monthly to hire the item, but won't own it before the last installment has been paid back. Often this kind of credit agreement to include a balloon payment (lump sum) at the end or the agreement.
by: Clare Briggs
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