New rules on lending came into force yesterday, guaranteeing customers a new level of clarity on their loan agreements.
Lenders are now required to be clearer and more specific about the main factors of the loan before borrowers enter into the contract, setting out terms such as total amount borrowed, total amount repayable, amount and frequency of repayments, and APR charges.
This same information must now be displayed prominently on the loan agreement itself, which must contain separate information about any additional payment protection insurance.
"Hidden payments and lack of clarity are very unhelpful for people trying to manage their credit commitments, which is why we've brought in these changes," said consumer minister, Gerry Sutcliffe.
"The pre-contractual information will help people shop around and make informed choices between the different products available to them, and the new level of clarity on loan agreements will mean that no-one is in the dark about what they are signing up for."
New rules also came into effect yesterday requiring that borrowers who wish to settle early are given a fair deal.
The National Consumer Council welcomed all aspects of yesterday's new legislation.
"With debt now affecting a wider spectrum of people - including the better off - and personal bankruptcy figures on the increase, these new obligations on lenders are extremely welcome," said Claire Whyley, deputy director of policy at the National Consumer Council.Click here to find the best secured loan for you.
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