Read The Small Print

Before you finally lay hands on your loan, you'll be asked to sign a credit agreement which sets out the terms and conditions. The agreement is a legal contract, so read it carefully before you sign. This may be hard work - the Consumer Credit Act requires that the information be `readily legible', but it doesn't require that it be readily intelligible. If you are unsure about any of the terms or conditions, ask the lender to explain what they mean. If you're still unhappy, get advice from your local Citizens Advice Bureau (address in the phone book).

The agreement is effective only when both you and the lender have signed the agreement. Usually you'll sign first. You must be given a copy of the document you've signed. There might then be quite a delay before the lender signs (while your creditworthiness is checked, say). You must be sent a further copy of the agreement within seven days of the lender signing it too. So, with most loans, you must be supplied with two copies of the agreement. The lender won't be able to enforce it unless they have followed the procedures correctly.

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Annual Percentage Rate (apr)

The APR is a way of expressing the true cost of a loan taking account of not just the amount of interest to be paid, but also when the payments are to be made and the impact of any other charges you have to bear as a result of taking out the loan - for example, arrangement fees. The APR is given as a percentage figure and looks just like an ordinary interest rate but must be identified as the APR and must be given more prominence than any other rate included in the quotation.

Here is an example of how a 'flat rate' (often quoted by lenders) compares with the true rate - APR. Suppose you... see: Annual Percentage Rate (apr)

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