Terminating a Credit Agreement

The Consumer Credit Act (CCA) ensures that consumers have the ability to repay in full a loan by giving notice to the lender and paying off the outstanding sum. The CCA dictates exactly how the amount outstanding must be worked out, to ensure that borrowers are not ripped off by the loan companies. Additionally, borrowers are able to make a claim for the charges for the credit once taxes, duties and charges have been deducted. This is all stated in the CCA
When the lender works out the amount of the repayment due they use the date 28 days after they were informed by the customer that they will terminate the loan arrangement
Like Section 77-99 of the Consumer Credit Act, section 97 requires the lenders to provided detail of the repayment amount within twelve days of a request. If this is not done the loan becomes unenforceable until this is information is provided.
Ending Hire, Conditional Sale and Hire Purchase Agreements
With HP and Conditional Sale Arrangements the contract can be cancelled whenever the consumer likes. However, there's a need for al least half of the loan to have been repaid and the goods have to have been looked after. For hire arrangements termination can only take place after 18 months or earlier if this is stated in the contract.
As a Reminder: Credit Agreements Explained
1 Credit Sale
The credit sale agreement is usually used for high-priced purchases such as luxury goods, cars and home improvements. It is essentially a loan for the purchase price of the item with the money being paid over a fixed period of time in equal monthly instalments.. The consumer might have to pay a deposit, and there may not be anything to pay for an initial period. It doesn't matter how it is done, you will own the goods as soon as the contract has been signed, even though you may have paid nothing. If an agreement is promoted as being 0% interest, you will have to repay the outstanding balance within a stipulated period, otherwise the money owed will become part of a where you will have to pay interest.
2 Conditional Sale Arrangements
The Conditional Sale Arrangement is like to the HP agreement already described. However, you won't actually own the items till you have paid off the loan. In addition, there could be additional conditions which must be met before you can claim ownership.
3 Hire Contracts
This is the hire of goods in return for a monthly payment. You never actually own the goods and have to either enter into a new arrangement when the current agreement or give back the goods. If you can't pay or give back the goods early you are liable for the outstanding amount.
4 HP (Hire Purchase)
With HP credit agreements, you pay monthly to hire the goods. However, you won't own it before the last payment has been made. It is not uncommon for this type of arrangement to have a balloon payment (lump sum) at the end or the arrangement.
For more information visit www.consumercreditact.org.uk
I am a contributor to: Consumer Credit Act 1974
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