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Renfrewshire Community Plan 2008 - 2017 Credit advice
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Before you sign up for a credit card, visit our Top Tips for Buying on Credit page.
If you are suffering from financial difficulty because of outstanding debt, please visit the Debts and Money Advice page.
Credit advice
This page gives you information about your consumer rights when buy goods or services on credit.
- Credit cards
- Credit sales
- Interest free credit
- Hire purchase
- Cancellable agreements
- Benefits of using your credit card
- Credit reference agencies
Beware
- If you do not keep up payments, you will be in breach of contract and may be sued for the outstanding balance.
- If you are buying a car on hire purchase it is likely that the finance company (the owners) will repossess the vehicle.
- You could also be liable to pay any expenses that the finance company incurs in carrying out any necessary repairs to the vehicle.
As credit cards are both easy to use and are accepted by the majority of traders in both the UK and abroad, they are the most commonly used type of credit.
Under the provisions of Section 75 of the Consumer Credit Act 1974, if you buy goods or services costing over £100 using a credit card, if the goods or services are defective, you will have an equal claim for compensation against both the seller of the goods or services and the finance company. Also, if the trader goes out of business before your goods arrive, you can claim all the money back from the credit company, even if you only paid a deposit using a credit card.
Section 75 (equal liability) only applies to credit transactions, therefore, the finance company does not have any liability for purchases that have been paid for by charge cards as these are debit cards not credit cards. American Express and Diners Card are examples of debit cards.
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Credit sales
These are agreements where the goods are supplied by the trader who, acting as an agent, then arranges finance for the consumer with a separate finance company. A copy of the signed credit agreement is kept by the consumer, and another copy is sent to the finance company. If the finance company approve the loan they will sign it and return a signed copy to the consumer.
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Interest free credit
Many stores offer consumers the option to purchase expensive items on credit, but do not require the consumer to make any payments for several months. These schemes are also credit sales and therefore, the finance is supplied by a separate finance agreement.
The consumer has to sign a credit agreement, and usually has to agree to make payments by direct debit, but with the option to settle the account in full by the end of the interest free period. If the account is not cleared within the time period, then the finance company will activate the direct debit and payments will be taken out of your account. Interest will also be payable on the total amount of the loan from the date of signing the agreement.
Warning - Some companies do not send you a reminder towards the end of the interest free period. It is your responsibility to make sure that payments are made on time. We recommend that you keep your own records.
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Hire purchase
This type of credit tends to be used for the purchase of vehicles. When you negotiate with a garage to buy a car on hire purchase, the garage then sells the car to the finance company who, as the owner, hire the car to you.
You will have an option to buy the car at the end of the agreement, but you will not become the owner until the last payment has been made. Until you have made your last payment, you will also need the permission of the finance company to sell the vehicle.
Any faults that occur will be the responsibility of the finance company and you can refer your complaint to them.
You may also have the right to return the car after half the payments have been made, as long as no payments have been missed. You should note however that finance companies will charge a fee for any works needing done to the car when it is returned.
For more detailed information on buying a car on hire purchase, please visit out dedicated page.
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Cancellable agreements
Credit agreements signed at the trader's premises are not cancellable. However, if you sign the agreement in your home you have a short period before the agreement becomes binding and you can cancel without any financial penalties. This is normally 5 days after you receive your second copy of the agreement by post.
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Benefits of using your credit card
If you buy goods which cost over £100 using your credit card you have an equal claim against the finance company. This is very useful if the goods turn out to be faulty and the seller has ceased trading, or has refused to help. You may then hold the finance company liable for the total value of the contract.
This benefit also applies if you have purchased goods abroad that cost over £100, then turn out to be faulty. It will be far easier to make a claim against the finance provider than to try to make a claim through a foreign court.
You can take the trader, the finance provider, or both to the sheriff court.
You are entitled to have a written quotation which includes the annual percentage rate (APR) before you purchase the goods.
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Credit reference agencies
These companies keep records of the credit worthiness of the majority of UK residents. They obtain information from a variety of sources such as courts and companies who are owed money. They sell the information to finance companies who, before they authorise a loan, check to see whether you have defaulted on any loans or have any outstanding court judgements. The finance company will base its decision to lend, on the information supplied by the agency.
As the agencies use a point scoring system, you may be refused credit if no finance records are available, as the finance company may not be willing to take a risk by authorising a loan in these circumstances.
You may also be refused credit if you are not registered to vote at your current address. You have to register your address every year in order to stay on the voters roll. If you are a Renfrewshire resident and are not registered at your property you should contact The Renfrewshire Valuation Joint Board.
To check your credit record details you should contact the two main credit reference agencies which are Experian and Equifax. Other credit reference agencies are available.
If you require further advice on credit issues, please contact our partners, Consumer Direct on 08454 04 05 06, or visit their website.
Contact information
- email: ts.es@renfrewshire.gov.uk
- call in or write to us at:
- Renfrewshire Council
Environmental Services
Trading Standards
Renfrewshire House
Cotton Street
Paisley
PA1 1BR
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