If you offer or offer credit to consumers, you must comply with the Consumer Credit Act and all relevant rules. Contractual terms must also comply with unfair clauses in consumer contracts – see customers` rights to challenge abusive contractual clauses. This provision defines the parties` understanding of the terms of the agreement in the event of a problem. While the financial institution usually prepares the first draft agreement, it is the subject of negotiations. A potential borrower should have a clear overview of what they want from the credit facility. Read on to learn more about different types of credit agreement facilities and general provisions. Credit contracts for individuals vary depending on the type of credit issued to the customer. Customers can apply for credit cards, private loans, mortgages and revolving credit accounts. Each type of credit product has its own industry credit contract standards. In many cases, the terms of a credit contract for a retail credit product are made available to the borrower in his or her credit application. Therefore, the application for credit can also be used as a credit contract. Institutional credit transactions also include revolving and non-renewable credit options. However, they are much more complicated than retail agreements.
They may also include the issuance of bonds or a credit consortium when several lenders invest in a structured credit product. After signing, you must provide the borrower with a copy of the credit agreement – and all other documents to which it refers – unless it is identical to the one you have already submitted. In this case, you must inform them in writing that the agreement has been executed and that they can request an additional copy within 14 days. They must ensure that the proposed credit contract is properly explained to the borrower. This should relate to the following: you must assess the creditworthiness of a potential borrower before making loans or significantly increasing the loans already granted. This should be based on sufficient information, possibly obtained from the borrower and, if necessary, from a credit reference agency. The right of withdrawal applies to all regulated consumer credit contracts, except: institutional credit contracts must be concluded and signed by all parties involved. In many cases, these credit contracts must also be submitted and approved to the Securities and Exchange Commission (SEC). In most cases, the borrower has the right to terminate a credit contract within 14 days of signing, without justification.