At some stage in life most people are likely to borrow money. There are many different types of credit and loans. You should get the right loan for your needs and should shop around for the best loan.
Consumers who borrow money are protected in legislation by the Consumer Credit Act 1995. This Act covers all types of credit and credit institutions must comply with this law. The Act also prescribes the ways in which credit may be advertised. If you are having trouble paying off a loan the Money Advice and Budgeting Service (MABS) may be able to help.
Generally, banks, building societies and other credit institutions charge for the use of borrowed money. This payment is called 'interest' and it is calculated on the amount of money you borrow and the length of time that you borrow it. You may also have to pay fees to cover administrative expenses on your loan.
If you are borrowing money or buying goods it is important that you ensure that you can afford to pay back what you borrow. Be realistic about your living costs. Make sure that any money you have left after you pay for essentials is sufficient to cover the cost of a loan. Check whether you can save enough money to buy what you need rather than getting a loan. You can also reduce the amount that you may need to borrow by using money that you have saved.
Get a loan to suit your needs
There are many different types of loans and credit. Each type of credit is suitable for a different purpose. Some are more suited to short-term borrowing and others are more suited to medium to long-term borrowing.
Shop around for the best value
Banks, building societies and credit unions all offer a range of loans. When comparing charges for the use of borrowed money, interest on loans must be presented as the Annual Percentage Rate (APR). The APR states what percentage of the amount you borrow you will be charged in addition to paying back the loan amount. It is important that you compare like with like. Loans can be paid back over different terms or lengths of time. You may think that you are getting a good deal on a loan with a low APR but if you are paying more instalments over a longer period of time you may find that it will cost you more. Cost of credit is another way of comparing loans which looks at the total cost of the loan.
The Central Bank authorises banks, building societies and credit unions. You should only borrow from an authorised financial service provider. This protects you and your money from unscrupulous lenders. If you are unsure if the company that you are dealing with is authorised contact the Central Bank to find out.
You can access a loan calculator to help you work out repayments on a loan at consumerhelp.ie. You can also compare personal loans, credit cards and overdrafts with financial product comparison tools.
There are many different forms of credit including:
If you have ever used credit you will have a credit history. A credit institution can refuse to give you a loan if you have not complied with the terms and conditions of previous loans. The Irish Credit Bureau keeps a database of all borrowers and credit institutions can check the status of previous loans taken by a potential borrower. You can find out more about your credit rating and the Irish Credit Bureau.
When you have entered into a credit agreement, the Consumer Credit Act 1995 protects your rights.Your entitlement to privacy is protected and there are rules about lenders contacting you. These restrictions are legally binding on all lenders and are designed to protect your privacy as a consumer. For example, the Act prohibits visits or telephone calls from an authorised financial institution about the agreement to you without your consent at any place between 9pm and 9am weekdays, or at any time on Sundays or public holidays. Calls or visits to your place of work are prohibited unless you live there, or if reasonable efforts to contact you have failed. Only the person(s) involved in the credit agreement may be contacted (unless other arrangements have been made).
The Competition and Consumer Protection Commission (CCPC) provides information and education about the costs, risks and benefits of financial products and promote the interests of consumers of financial products. The CCPC provides a range of consumer guides and information on financial products:
Contact information for the network of Money Advice and Budgeting Service (MABS):
Westend Commercial Village
Tel:(01) 812 9500
If you have a question relating to this topic you can contact the Citizens Information Phone Service on 0761 07 4000. The Phone Service will operate Monday to Friday, 9am to 6pm during January 2017. You can also visit your local Citizens Information Centre.