The Consumer Credit Act contains rules for how companies may offer loans to private individuals. The main purpose of the law is to protect borrowers from taking loans with questionable terms. The law is mandatory for lenders for the benefit of the borrower. The law applies when individuals borrow money or receive credit from companies. This includes when you get a loan and when you buy goods or services on credit.
The Consumer Credit Act – your right as a consumer
The Consumer Credit Act is comprehensive and contains rules for lenders and rights for borrowers. Here are some of the law’s most important points for you as a borrower:
1. You always have at least 14 days to cancel
You always have the right to cancel a loan within 14 days of the signing of the agreement, alternatively from the day you received all relevant documentation of the agreement. You terminate the agreement by notifying the lender via any channel, in writing or by telephone.
2. You should always receive documentation with clear information about your loan agreement
When you sign an agreement, you should always receive documents with information about your loan agreement sent to you. They can be sent in paper form, via mail or PDF.
3. You always have the right to repay the loan in advance
You always have the right to repay your loan early, no matter what the installment plan looked like in the agreement. If the loan rate is variable, the lender is not entitled to charge any extra fee for this. In the case of fixed interest rates, the lender may charge a difference for lost interest income, known as interest rate differential compensation.
4. If you are denied a loan, you always have the right to know why
If you refuse your loan application, you must be informed of the reason for your refusal.
5. Fixed interest rates may only be adjusted afterwards if the original agreement permits
If the loan has a fixed interest rate, it may only be changed in special circumstances. These include policy decisions, increased borrowing costs or changes in the reference rate.
In the event of a breach, it is the Consumer Agency that you should turn to
If you feel that a lender has behaved incorrectly, it is primarily the Consumer Agency that you should turn to. In those cases, it is important that you can provide the Swedish Consumer Agency with all relevant documentation with the loan.
What does the right of repentance mean?
The right of withdrawal means that a consumer has the right to cancel a purchase, loan or installment within a certain period of time. However, in order to understand this, it is important to first understand what the word consumer really means. The word refers only to private individuals, ie not to traders. This means that a consumer who is also a creditor has the right to regret a credit for 14 days after the credit agreement has been concluded. The same applies to 14 days after the consumer has received the credit agreement and thus had the opportunity to see the terms.
That’s how it works
A consumer who enters into a credit agreement and then repents within 14 days is entitled to repay the total loan amount to the lender and only pay interest for the days on which the loan was accessed. This is the general rule of the Consumer Credit Act, but there are exceptions about the lender before entering into an agreement informing the customer that the interest rate is bound. In the event that information about this was included in the agreement, the lender may be required to pay a sum equal to the creditor’s lost interest income, even if the loan amount has already been repaid.
So do you if you want to use your right of withdrawal
The most important thing is to notify the lender within 14 days of the agreement being concluded, or the day on which you received the company’s terms and conditions. The law allows the consumer to notify the lender either in speech or in writing, but it is of course recommended to do so in writing. An optimal alternative is to inform the company via e-mail, since it is then clear what date you heard from you. This way you can prove that you acted within the time limit and then have the right on your side – regardless of when the creditor sees the message. After that, it is important to repay the entire loan amount within 30 days. If all this is done on time, the creditor will be obliged to repay the setup fee. This is an administrative fee that most lenders are charged with after a loan is granted and repaid in the event of repayment of credit agreements.