Regulated credit agreements (Source: Citizens Advice Bureau)

Most types of credit and hire agreements are regulated by the Consumer Credit Act 1974, which gives a borrower some important rights (see below). An agreement will be regulated if…

• • It is for an amount between £50 and £25,000 (If the agreement was signed before 1 May 1998, the limit was different); and
  • the borrower is an individual, not a company
  • it is not an exempt agreement.

Consumer Credit Act 1974
If you enter into a credit agreement which is regulated under the Consumer Credit Act you must be given a written copy of the agreement when you take out the loan. This must set out:-

• What type of credit agreement it is, for example, credit sale, hire purchase or conditional sale
  
• The true cost of the credit, worked out according to a special formula (APR)
  
• The amount of each payment, when it is due to be paid, and how it is made up (loan, interest, administration charge)
  
• Your cancellation rights and whether you can pay off the debt early (see under heading paying the loan off early).

Exempt agreements
Agreements which are exempt from the Consumer Credit Act include:-

• Agreements to hire gas, electricity or water meters
  
• Trade agreements with short repayment periods, where the number of repayments is four or more (unless it is a hire purchase or conditional sale agreement)
  
• Agreements where the whole of the credit for a period is repayable by a single payment, for example, charge cards, or milk bills. Hire purchase and conditional sale agreements are not exempt
  
• Loans secured on land, for example, mortgages
  
• Credit given at less than commercial rates of interest, for example loans from credit unions or an employer.