3 Laws You Must Know to Protect Your Money When Taking a Loan

Have you ever borrowed money or taken a loan and felt that you had been wronged? There are many banks and lending institutions to give you a loan. However, not all of them are honest in their dealing with customers. We are not saying every lender is the same, but there are some fly-by-the-night lending agencies to rip you off financially. You feel cheated when your legal rights have been violated after you take a loan. You might be wondering how these shady companies get away with such illegal practices. Everything is possible if you are not aware of the law when applying for a loan. People without a degree or financial knowledge are more vulnerable to illicit actions of such lenders. Here are the three laws that you must know to protect your finances when taking a loan:

1. Credit Card Accountability Responsibility and Disclosure Act

“The Credit Card Accountability Responsibility and Disclosure Act” was implemented in 2009. It’s also called the CARD Act. The content of this law was very clear about its goal as it sets transparent and reasonable practices for financial products such as credit cards. The law is not simple and quite detailed. In simple words, the law gives borrowers the following rights:

• Restriction on the retroactive increase in interest rates.
• Provides borrowers with the right to be informed about any change in interest rates.
• Prohibition of fees for any telephone, electronic or mail payments.
• Protects consumers regarding inactivity charges or fees for any gift card.
• Restriction on late payment penalties or related fees.

So if you are applying for a credit card loan, make sure that you know this law. Take some time out of your busy schedule and read the Credit Card Accountability Responsibility and Disclosure Act carefully. Read twice or thrice until you understand everything about this law. The law imposes certain restrictions on card issuers to prevent misuse. According to an article published on https://www.huffingtonpost.com, this act restricts card issuers from providing credit cards to teenagers, i.e., anyone who is below 21 years of age unless the person has some valid evidence that he has adequate income to pay off his or her debt.

2. Truth in Lending Act

It is also known as TILA, a law that helps you to understand what you are expecting when taking a new loan credit. According to the Consumer Financial Protection Bureau (CFPB), Regulation Z lets you evaluate credit offers. All lenders are made to use similar terms and terminology and format when explaining rates of interest. Before the law’s implementation, customers were perplexed with an array of credit terminology and interest rates.

TILA also saves consumers from unfair and incorrect credit billing and credit card practices. The act plays an important role in protecting the loan customers because it offers a fair platform for assessment across many offers. To be candid, TILA provides you with the information you require when taking a loan, such as the total price of borrowing money. Therefore, the law eliminates the red tapes of marketing tricks, ploys, and gambits. That is because you know that the devil can be found in the details of the contract or agreement. The law is not about what information you have. It is to help you figure out what such information means to your wallet. If you are contemplating to take a new loan or credit, borrow money from institutions like https://www.libertylending.com/, which abides by all rules and regulations of the country.

The essential aspect of TILA is the written disclosure of the monetary fees when you borrow money. All charges must be mentioned. The total sum that the borrower is supposed to repay should also be stated if, the individual requires the whole loan term to repay the loan.  

The law has a downside as well if one is taking a property loan because it can lead to an abnormally long financial disclosure. An average property buyer will be overloaded with information due to TILA. He or she will receive so much data that the disclosures and notices often go unread.

3. Fair Credit Reporting Act

When it comes to financial disclosures, it is one thing. However, what do you think of the data that is revealed to you as a consumer? Fortunately, the Fair Credit Reporting Act (FCRA) is in place. It makes you see exactly what is mentioned in your credit report. The law lets you assess your report annually and that too free of cost on websites like AnnualCreditReport.com. You can read the reports, and you must do so religiously. That is because you may find discrepancies that need rectification. Else, your overall credit score may get affected and prevent you from applying for a loan.

The law gives you more rights than seeing your report. The FCRA empowers you to rectify, dispute, and even get rid of incorrect data in your report. The credit agencies should investigate and correct or remove data that can’t be corroborated. For example, a changed social security number gives some other person’s poor borrowing habits on your credit report. Again, a lender erroneously reports your borrowing details. All such errors may hurt your report.

Your credit report is not only important when you apply for a loan but also when you file a job application, applying for an insurance plan, renting your house and things like that. Therefore, if you find any mistakes in your report, the law gives you the right to argue with the bureau that reports them. Do not delay and act proactively. 

Conclusion

Now that you know about these three important laws, you can use them when applying for a loan. Though this is not an all-inclusive list, you can use them to your benefit when the situation arises. If you feel you are denied your rights, you can file a complaint immediately. You will get just treatment if the authorities feel that you have been wronged. The government will take proper steps against those lending institutions to violate consumer’s rights.