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Consumer Credit Debt and Borrowing

Almost all types of consumer debts in the UK are regulated by the Consumer Credit Act of 1974.

The Bill includes your rights when you obtain credit or borrow. It entails the guidelines on how debts are collected and how payments are being protected from unlawful lending or debt collection.

Consumer Credit Defined

Consumer credit if a personal debt that involves purchasing of goods and services. Credit card is one form of consumer credit. Usually, consumer credit is described as unsecured debt, though any form of personal loan could also be considered as consumer credit. Consumer credit is also known as consumer debt.

Moreover, consumer credit is offered by banks, retailers, and others to allow consumers to purchase goods directly and pay off the expense over time with interest.

Common Consumer Credit Debts

Overdrafts

An overdraft is a form of credit that is associated with your bank account. It enables you to spend more than the money available in your account up to the allowed limit.

Personal Loan

If you think of getting a personal loan, you have to be aware of certain factors before stepping into an agreement. The following are some of the things that you need to consider before entering a personal loan agreement.

Store Card

A store card is a credit card or a finance agreement that you can use in purchasing items or goods in shops. It can be utilized to pay goods on credit and pay them later in one go or through instalments. Usually, you’ll be charged interest if you chose to pay through instalments. The interest rate is frequently higher your credit card.

Store Finance Debt

Store finance is under the Consumer Credit Act; thus, most agreements are treated as a type of unsecured personal loan. This means, once you’ve obtained the goods, you are by legality the owner and it can’t be repossessed if you miss payments.

Short-term Loan Debt

Short term loans are designed for borrowing small money and repaying it for a certain period which is usually up to 12 months. These loans are often appropriate for people with poor credit who may have a hard time taking out a loan elsewhere. 

Catalogue Debts

Catalogues are known ways for purchases where you want to spread the costs over several payments. This helps you afford expensive purchases. However, catalogues are costly most of the time and may have high-interest rates.

Hire Purchase Debts

Hire purchase is a finance agreement under which the purchase value can be paid over an agreed term through instalments. HP is utilised to obtain vehicles or goods.

Logbook Loan

Logbook loans are a type of borrowing that is secured against your vehicle or car. The ownership of your vehicle passes on to your logbook loan provider until you have paid your debt.

Insurance Debts

Insurance protects you or your belongings against any danger or risks in case circumstances may arise such as during loss or damage. Some insurance policies can be secured by law while others may be a part of a contract like when taking out a mortgage.

Doorstep Loans

Home collection loans and home credit loans are also known as doorstep loans or door to door loans. These type of personal loans are delivered into your doorstep by a local company representative.

Credit Card Debt

Once you make the minimum payments on your credit card for more than several months, you’re likely to get a letter from your credit card institution requesting to raise your payment each month.

Car Finance

When getting a vehicle or car with a conditional sale or hire purchase agreement, you do not own the vehicle outright. Until you comply with the agreed payments, the vehicle belongs to your lender.

Guarantor Loans

A guarantor loan is a type of loan wherein your guarantor (family or friend) agrees to repay your debt if you cannot afford the payments. This usually happens when you default on debt payments.

Buy Now Pay Later

A popular means to purchase items and repay it through instalments is commonly known as ‘buy now pay later’ scheme. BNPL credit boom in popularity in recent years because of the available provider such as Klarna and Clearpay.


Debt Help and Advice

Debt relief solutions or programs are an exceptional choice for several people. However, it has to be the right option based on your circumstances. So, before you take a big leap in getting into a debt relief program, scrutinize whether it is the right debt solution for your situation. Mostly, it is ideal to seek expert advice and guidance.

We can help you determine the available options for you. If you’re already a Debt.org.uk customer, we can proceed with helping you throughout your tough times. Get in touch with us and let us help you.