Loan terms and conditions

Loans and the Law

Loan or credit agreements are contracts – they are legal documents.

Understanding what the loan agreement says is important because when you sign it, you make a legally enforceable promise to stick to the terms.

You also have rights when you borrow money.

Some rights are statutory – they are your rights by law. You have these rights because of the Consumer Credit Act.

Citizens Advice Bureau – Types of loans

Other rights might be written into the agreement. So read and understand the agreement before you sign it. If you know what your rights are you can take action to protect yourself.

Before you sign a loan agreement ask your lender to explain all the terms in it.

If they cannot explain all the terms in a way you understand, don’t sign it.

Get advice from a qualified money advisor

If you don’t stick to the agreement terms your lender will take action against you.

Find out what action lenders can take

Common words in loan agreements

Loan term: the amount of time you have to pay the loan back, usually a number of months or years.

APR: the Annual Percentage Rate is made up the of rate of interest you pay on the loan plus any fees you have to pay.

Rate of interest: the extra amount the lender will charge you each month or year.

Cooling off period: the time a lender gives you to change your mind about taking on a loan, after you sign the agreement.

Cancellation: what you have to do to cancel the loan agreement. You might have to pay all the loan back in one go and pay extra if you want to cancel the loan after the cooling off period.

Liability: who is legally responsible for paying back the loan.

Find out who you can get a loan from

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