When it comes to credit agreements, certain regulations must be followed to ensure that both parties are protected. However, what happens when a credit agreement is made at a distance, such as via phone or online? In such cases, it can be unclear which regulations apply. In this article, we`ll take a closer look at the regulations that apply to credit agreements made at a distance.
Firstly, it`s important to understand what is meant by a credit agreement made at a distance. This refers to a situation where the agreement is made without the parties physically meeting. For example, if a consumer applies for a loan online and is approved without any face-to-face contact, the resulting credit agreement would be considered one made at a distance.
When it comes to the regulations that apply to such agreements, there are two main pieces of legislation to consider. The first is the Consumer Credit Act 1974, which sets out the rules for credit agreements in general. The second is the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, which specifically deals with distance contracts.
Under the Consumer Credit Act 1974, lenders are required to provide certain information to borrowers before a credit agreement is made. This includes details such as the amount of credit, the interest rate, and any additional charges that may apply. However, the Act doesn`t specifically address credit agreements made at a distance.
This is where the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 come in. These regulations apply specifically to distance contracts, including those relating to credit agreements. Under the regulations, lenders are required to provide borrowers with certain information before the agreement is made. This includes the total cost of the credit, the annual percentage rate (APR), and the duration of the agreement.
In addition to this, borrowers have certain cancellation rights under the regulations. For example, if a credit agreement is made online, the borrower has a 14-day cooling-off period during which they can cancel the agreement without penalty. This gives borrowers the opportunity to review the terms of the agreement and decide whether it`s the right choice for them.
Overall, when it comes to credit agreements made at a distance, it`s important to understand the regulations that apply. While the Consumer Credit Act 1974 provides some guidance, it`s the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 that specifically address distance contracts and the requirements for lenders to provide information and give borrowers cancellation rights. By understanding these regulations, both lenders and borrowers can ensure that they are protected when entering into a credit agreement at a distance.