Consumer Rights and Responsibilities
November 15, 2007
Have you ever sat down and read a credit contract, front and back, and all the pages in between? If you are like many people, the answer to that question is no.
Most consumers, in the US anyway, assume that lenders are going to treat them fairly and in many cases that is exactly what happens. However, there are a few lenders out there who take advantage of consumers and dealing with those companies can cause problems.
By law, consumers have the legal right to a credit marketplace that is not only fair but also open through information. When consumers are shopping for credit, regardless of what kind of credit it may be, they have a legal right to be informed on the terms and conditions of the credit. In return for lenders offering this information, consumers assume the responsibilities of paying the loans when due and in full. It is a win-win set up as long as everyone plays by the rules.
Consumer laws were enacted to help protect borrowers. They were brought about by abuses in the system, on both sides, lenders and borrowers. Today, you don’t have to guess as to what is legal or not, you can simply use the law.
The Federal law known as the Consumer Credit Protection Act is divided into four sections: Equal Credit Opportunity Act, Fair Credit Reporting Act, Fair Credit Billing Act, and the Truth-in-Lending Act.
Under the Equal Credit Opportunity Act lenders may not use unfair or unequal criteria when they are granting or denying loans.
The Fair Credit Reporting Act is a very important piece of law for consumers. It allows consumers to make corrections when there is incorrect information on their credit reports. It sets up instructions that the credit agencies must follow when there are mistakes on the credit reports. It also limits who can have access to your credit report.
If a consumer wishes to contest a credit card billing issue, the Fair Credit Billing Act allows that to happen and stipulates how it should be done.
The Truth-in-Lending Act makes it law that lenders reveal to the consumer the amount of finance charges on a loan as an annual percentage rate.
The Truth-in-Lending Act is one of the most important laws passed for consumers as it makes it mandatory that consumers get honest information concerning the interest rates that they are going to be charged for a loan. Consumers need to know this information before they can make an intelligent decision concerning the loan.
The Truth-in-Lending Act mandates that an interest percentage be computed and stated as an annual percentage rate (APR) which allows consumers to compare rates from one company to the next. In addition to this, Truth-in-Lending also details how credit offerings must be printed in advertisements. When creditors have to spell out the details, less confusion occurs.
Consumers who own homes should also know that the act gives them the right to change their minds within three business days if the home was used as collateral or security for the loan.
Should a consumer change his or her mind within that time period, they may legally cancel the contract. The act requires that the lender tell consumers this at the time of signing the contract.
Credit laws also detail what the consumer must do to stay in good faith of the contract and also details what can happen if they do not.
If a consumer does not hold up his end of the contract, the lender has three options: They may repossess the item from the borrower. They may obtain a court order in which they can begin to garnish wages. They may file a lawsuit against the borrower requesting payment for the full amount of the loan or debt.
While these Federal laws are important and can be very useful for consumers, each state may also have its own set of consumer laws. Many states have set upper limits on the amount of interest a company can charge on its loans. This can be very important for those individuals who use or plan to use payday advance loans. Some payday advance loan companies have used incredibly high interest rates on their customers and states are beginning to step in to put a stop to that. All creditors must state what they are charging in interest. Consumers who are not sure about the interest rate or are not sure how much money the loan will cost them should ask the company representative to explain it to them.
As consumers become more aware of the problems that excessive credit obligations can cause these laws will become more important on an individual basis. There are also rules concerning how debt collectors must act when attempting to contact consumers for past payments. You can learn more about each law by visiting any of several website that host consumer information. Knowing what is legal and what is not can help anyone who finds himself in financial trouble