Personal
loans are governed by the Consumer Credit
Act 1974. The Act contains strict regulations
about how money is lent and covers unsecured
loans up to £25,000 (these are
known as 'regulated loans'). When taking
out a personal loan you will be asked
to sign a credit agreement, and you'll
be bound by it's terms. As extra protection
for both yourself and the lender, insurance
policies (known as payment protection
insurance) are available and these will
cover your repayments in the event of
sickness, accident or unemployment.
In the event of your death your debt
could even be repaid in full. Although
beneficial, these policies can be costly
with both the cover and cost varying
between lenders. You should always check
what a policy includes and excludes,
as this may affect your decision to
take it out. Stand-alone policies are
available and these may prove better
value than the policy offered by your
personal loan company.
