At times our credit scores don’t suffice to get a proper bank loan and we are forced to turn to loan sharks for help; illegal lenders are known as loan sharks. While borrowing loans from these people will help us overcome the financial difficulties we end up in greater trouble than before and there is no legal recourse to this. It is therefore paramount that you know your rights before you borrow money. This will prevent stress and pressure from lenders.
- Always sign a credit agreement with the lender. This important piece of the document will contain details about how much you borrowed, what are the costs involved and what is the time span within which you must repay the entire amount. It will also state if there is any additional interest for missed or late payments.
- You can cancel a credit agreement within 14 days of signing without giving any reason but you must give the lender cancellation notice preferably in writing with the date and time visible. You will have to return the money borrowed when you cancel the agreement.
- If according to your agreement you are allowed to pay off some of your loans early, then the lender must tell you the balance amount and also you will get a rebate on the interest and charges paid so far.
- Sometimes you might not be able to pay your repayment on time due to some unavoidable circumstances; in that case, your lender must send you arrears notice and a Financial Conduct Authority information sheet. This will help you sort your arrears. If you still lag in repayment the lender must send another notice and FCA before he can take any action.
The onus is on your lender to provide you the correct information without which he cannot take you to court.