Before You Borrow: Understanding the Rules and Regulations
Taking out a loan can be a very useful way of quickly obtaining money.
They’re the perfect choice for consumers who need to raise cash in a hurry, and can be used for a variety of different purposes.
There are many different types of loans available, including:
- Secured and Unsecured Loans
- Personal and Business Loans
- Close and Open Ended Loans
- Guarantor Loans
Each loan type is designed to suit a different need. Personal loans can be used for anything, which makes them a great choice for anyone with small to medium borrowing requirements. Mortgage loans are the first choice for potential homeowners. Other types of loans, such as the 1st stop guarantor loans or secured loans, provide lending options for a wider range of people (including those with bad credit histories), and are defined by their penalties for non-payment.
Staying Safe When Borrowing
Before you take out a loan it’s always a good idea to make sure you’re fully aware of the rules and regulations involved in borrowing. The sector is heavily regulated, but there are still unscrupulous lenders who will happily encourage unwary consumers to borrow money that they later find they cannot afford to pay back. Learning the legal aspects of taking out a loan will not only help you to find the best loan agreement possible, it will also ensure that you don’t fall victim to unregulated lenders.
The Responsibilities of Loan Companies
It hasn’t always been the case, but nowadays lending companies are coming under increased pressure from the government to be clearer about their lending terms. This pressure has led to a reduction in the number of high interest loans being given out. A perfect example of this is the payday loan. The reasoning behind this is because there were many instances of unscrupulous loan companies allowing desperate consumers to borrow far beyond their means.
Your Responsibilities as a Borrower
To stay safe when looking for a loan, your first step should always be to find out whether or not a lender is FCA approved. The FCA is one arm of the governing body which used to be known as the FSA. This information should be easy to find. Lenders who are governed by FCA/FSA guidelines will most likely make this fact very clear, as it’s a good indicator of trust for consumers.
As a borrower, it’s always important to bear in mind that a loan agreement is legally binding. It’s your responsibility, therefore, to read all of the terms and conditions of a loan agreement before you sign it.