Slough Borough Council is advising residents to take care when taking out loans in order to promote safer communities across the town after the recent launch of the Stop Launch Shark programme for illegal money lending.
Officers from the Slough council’s trading standards team enforce the Consumer Credit Act 1974, a law which protects consumers when signing a credit agreement.
Keith Eaglestone, Slough trading standards manager has complied top tips to help residents make informed decisions when taking out a loan.
* How much will the credit cost you compared with other similar deals?
Compare the APRs. Usually the lower it is, the less you pay. But there may be other charges not included in the APR, so find out what these are. You need to be sure how much you are paying in total.
* Is your home being used as security?
If your home is used as security for a loan and you don’t keep up repayments, you could lose it.
* Is it the best deal and interest rate you can get?
Buying credit is like buying anything else – you shop around for the goods so do the same for the credit. The credit offered to you when you buy may not be the best deal.
* Do you fully understand the credit agreement form you’re about to sign?
Don’t be pressured into signing a deal at the till – if you don’t understand it, take it away and get advice. Remember you can’t change your mind if you sign in the shop.
* Will the interest rate stay the same?
Ask if the interest rate is fixed or will change. Find out if the rate offered is an introductory rate.
* Are there extra charges if you repay the debt early?
Some lenders charge an extra fee if you pay a loan off early.
* What happens if you miss a payment?
There are often penalty fees if you miss a payment which can greatly increase how much you will have to pay back.
* What do you have to pay each month and for how long?
It’s important to look at how long you’ll pay back as well as how much. For example £20 each month may be affordable but if it’s for 10 years you’re paying back a lot more than if it’s for two years.
* What’s the total amount that you will pay back?
The longer the period of the loan the more you’ll pay back. That’s why it’s important to pay off as much as you can each month on a credit card – the longer you take to pay back the more it will cost you.
* Can you take the credit agreement away to consider at your leisure?
A credit agreement is a legal document – you need to read it carefully before you sign.
Keith Eaglestone, trading standards manager for Slough Borough Council, said: “Always read a finance agreement before you sign it, and if in doubt, seek advice from us or the Office of Fair Trading.
“As well as our warnings about illegal money lending and loan sharks, we also want residents to be fully aware of the small details when it comes to legal loans.
“And remember – credit agreements can be easy to get into but may not be so easy to get out of.”
Cllr Shafiq Chaudhry, commissioner for Slough community and leisure, said: “In the present climate some credit deals can look to good to be true.
“Trading standards have issued this sound advice for residents to help them make decisions about taking out a credit agreement. It’s important people take note so they don’t end up struggling with repayments.”
For more information or advice, call trading standards on 01753 875255, or the Office of Fair Trading consumer direct team on 08454 040506.
Slough Borough Council
