Credit conso: Legislation and consumer protection
Anyone taking out consumer credit has rights aimed at better balancing the powers between professionals and consumers. Several laws also go in this direction by defining each of the borrower’s rights: the right to information, right of withdrawal, right to early repayment, right to suspend repayments, etc.
CONSUMER PROTECTION LAWS
Several laws protect consumers when taking out and implementing consumer credit. This is particularly the case of the Lagarde law, which in addition to strengthening the accountability and protection of borrowers, does everything in its power to make communication more precise and clear on the loans offered. The Lagarde law consists of several measures:
- the borrower can choose his own borrower insurance;
- over-indebtedness procedures are accelerated;
- usury rates are defined by taking into account not the nature of the credit, but its amount;
- for a loan of more than $ 1,000, the consumer automatically has the choice between a repayable credit and a revolving credit
THE RIGHT TO INFORMATION FOR THE CONSUMER OF CONSUMER CREDIT
In order to protect the consumer of consumer credit, the right to information is one of the essential rights when taking out a personal loan. Before even making an offer, the lending organization must provide the borrower with a form to fill out in order to judge its borrowing capacity.
Several supporting documents must be provided as soon as the amount of the credit exceeds $ 3,000. The lender must obligatorily deliver personalized explanations on consumer credit to the borrower, by presenting a clear and legible offer. In the absence of this information, the lender may be deprived of the right to interest.
THE RIGHT OF WITHDRAWAL: PILLAR OF CONSUMER PROTECTION
Possibility for the borrower to reverse his decision, the right of withdrawal applies in all cases of consumer credit. It is considered that the contract is only valid after the withdrawal period has passed. The withdrawal period corresponds to a period of 14 clear days from the signing of the contract.
During this period, the borrower can use the form attached to the contract by completing it, signing it and then sending it by registered post with acknowledgment of receipt to the lending organization. In no case does he need to justify himself on his decision, whether or not his borrowing capacity allows him to complete the contract.
THE RIGHT OF EARLY REFUND TO REDUCE INTEREST
Anyone subscribing to consumer credit has the right to request an early repayment, either partial or total, before the end of the contract. If the lender does not have the right to request early repayment indemnities, it may, however, apply penalties under certain conditions.
If the amount reimbursed in advance exceeds $ 10,000 over a period of one year, compensation may be requested by the lending organization. There are, however, exceptions:
- if the personal loan is a revolving credit;
- if the reimbursement is made when the rate is variable;
- if the reimbursement results from an insurance contract taken out to reimburse the consumer credit;
- if the consumer has an overdraft authorization.
THE RIGHT TO SUSPEND REPAYMENTS OF A CONSUMER LOAN
Consumer credit is contracted for several years, during which the borrower’s financial situation can change either favorably (in the majority of cases) or unfavorably. In the event of a job loss, illness, over-indebtedness or an industrial accident, it may happen that a borrower is no longer able to pay the monthly installments his personal loan.
Article 313-12 of the consumer code, fortunately, allows it to benefit from a right to suspend repayments of consumer credit. To take advantage of this, he must send a letter explaining his situation to the lending organization, which will arrange the repayment of the credit. Thanks to all these rights, make a simulation of consumer credit more serenely and with full knowledge of the facts!