All borrowers have rights and responsibilities when applying for unsecured loans. It is crucial for consumers to educate themselves regarding borrower's rights. We encourage borrowers to carefully weigh the need for loans. As a borrower, you have certain responsibilities to the companies issuing you loans. Upholding these responsibilities is your obligation to your lender since this will help you maintain a good credit score. Be familiar with your basic responsibilities when using personal loans.
Table of Contents
1. Knowing Your Rights As a Borrower To Rollover The Loan
2. Fees and Charges: What You Should Know For Being a Responsible Borrower
3. Installment Loans And Borrowers' Essential Rights
4. Payday Loans: What Borrowers Should Know About Their Options
5. Personal Loans Borrower's Rights and Responsibilities
6. Loans Consolidation For Borrowers
7. Borrower's Right to Privacy
KNOWING YOUR RIGHTS AS A BORROWER TO ROLLOVER THE LOAN
It is important for all borrowers to raise one's awareness regarding their rights to rollover the loan, since payday lenders give borrowers the option to renew their loans.
Rollover is common with short-term loans like payday loans, which generally average about 14 days in length. Rollover essentially allows the borrower to pay only the additional interest and fees they owe on the loan, and carry the loan until the following payday, usually two weeks.
USA Rollover Policy
A rollover is a service that is extended by lenders in the states that allow them. Rollover increases the cost of borrowing because it involves another interest payment on top of the previous one. This is why rollovers have been prohibited in 21 states, and many other states have imposed a limit on the number of times a payday loan may be rolled over.
There are states that impose restrictive policies, other US states allow only one rollover or several under certain terms. Before entering into any loan agreement it is necessary to check local state laws and regulations. Pay close attention to the points related to interest rates, repayment terms and the possibility of rollovers.
Other Borrowers' Rights That Apply to a Payday Loan
That said, there are some borrowers' rights that apply anytime they enter into any loan agreement. Those include the right to choose the best loan, the right to a detailed accounting of loan charges, the right to back out after a 'cooling off period' and the right to a competent communication with the lender regarding any changes to the loan.
It is crucial for all borrowers to educate themselves regarding these borrowers' rights because it is the best way to make sure you have the type of loan that best suits your personal needs. Always read the loan contract carefully before signing it. Borrowers have rights because financial experts and government officials want to make sure that all lenders are acting in good faith and that the process is fair for everyone.
FEES AND CHARGES: WHAT YOU SHOULD KNOW AS A BORROWER
Every borrower is entitled to a number of important borrower's rights. Learn how to make an informed choice when it comes to a loan agreement signing.
Every borrower has a responsibility to pay back the loan they borrowed from the lender. However, borrowers are also entitled to a number of significant borrower's rights under the Consumer Credit Protection Act. All borrowers have the right to choose a right loan without coercion from a lender, the right to a "cooling off" period, in which they can cancel the loan agreement within three working days.
Understand the Terms of the Agreement
However, the most important of all borrowers' rights is the right to receive a confident estimation of all loan interest rates, fees and charges before signing the loan agreement. Every lender is legally required to disclose every detail of the loan agreement and other costs when they occur. That means it is vitally important for every borrower to read and understand every word of their agreement, including the fine print before they sign the loan application.
Beware of Upfront Fees
As a borrower, you are entitled to make an informed choice when it comes to a loan, which means you have the right to know the total value of the loan, what fees you will incur over the life of the loan if you make every payment on time. But you are also entitled to know what charges will be incurred based on your action or inaction.
Until you sign the loan, the lender is not allowed to charge any additional fees. All charges should be merged into your loan. If extra fees are charged upfront before you receive the money, you are dealing with a predatory lender.
INSTALLMENT LOANS AND BORROWER'S ESSENTIAL RIGHTSIt is very important to understand what essential rights every borrower has in any and all circumstances. Be informed of terms and fees when using an installment loan.
When consumers fill out an application for an installment loan, they see a contract, replete with obligations on both sides: the lender's and the borrower's. Regardless of why you need the money or how you plan to spend it, it is important to understand what rights every borrower has in any and all circumstances.
Borrowers' Essential RightsThe essential rights every borrower has include the following:
- The right to choose – every borrower has the right to choose the best loan for his personal needs. That means the lender should not try to coerce you into taking a loan they like; you choose what loan offer is best for you.
- The right to full disclosure – when you decide to choose the loan offer that is best for you, as a borrower, you have the right to full disclosure of all terms, conditions, fees and charges that will incur over the life of the loan. The disclosure must be in writing and it must be presented to you before you sign anything.
- The right to cancel – a borrower always has the benefit of a ‘cooling-off period’ of three working days, starting when you receive the disclosure statement, during which you can cancel the contract and return the money.
- The right to a grace period – every borrower is entitled to a grace period before he starts to repay the loan. The length of the grace period should always be included in the loan agreement.
- The right to full communication – a borrower has the right to be informed of any changes in terms or conditions made by the lender before the changes take effect. That includes the sale of the loan to another party, when both parties are required to notify the borrower of the sale and transfer.
Lenders Have to Respect Borrowers’ RightsIt is crucial for every borrower to understand all of their rights and responsibilities as a part of a loan contact.
If your installment loan lender has violated any of your rights, you should notify them of the breach immediately, in writing. If they don't respond by correcting the problem, consider taking your complaints to the authorities, or even file a complaint in court through a lawyer.
PAYDAY LOANS: WHAT BORROWERS SHOULD KNOW ABOUT THEIR OPTIONS
When borrowers decide to apply for a short-term loan like a payday loan, they should understand that they are entering into a contract, and they have certain obligations under that same contract. Likewise, when it comes to lending money, those who do so are under an obligation to honor the rights of the consumer who is taking out the loan.
The Requirements for Submitting a Payday Loan Application
Every payday loan applicant is required to present the following information:
- A valid government-issued ID card.
- A current checking account statement that is dated within the previous 15 days and showing at least 30 days of activity, and which does not have a negative balance or excessive fees for NSF or overdraft.
- A verification of residence. You must also reside in the state where you are applying for the loan.
- Three months of verifiable employment.
Borrowers' and Lenders' Responsibilities
In addition to responsibilities, borrowers also have rights under the law.
- A lender is required to disclose everything about the loan, including the amount borrowed, the terms, and every penalty that may be charged, as well as how much they will be charged if they are delinquent or default.
- Lenders may have new obligations, as the Consumer Financial Protection Bureau (CFPB) is expanding lenders’ requirements under the law. In some states these rules will require a lender to verify a borrower’s ability to repay the loan before making an offer, limit the number of times a lender can debit a borrower’s bank account, and prohibit more than three consecutive loans to one borrower.
PERSONAL LOANS BORROWER'S RIGHTS AND RESPONSIBILITIES
When consumers decide to fill out an application for a personal loan, they are entering into a contract, that contains obligations on their part and the part of the lender.
What are your rights and responsibilities when using a personal loan? Respecting these responsibilities is your obligation to your lenders. See what option do you have to make the borrowing process fair.
Borrower's Rights and Responsibilities Related to Personal Loans
Regardless of why you need the money or how you plan to spend it, it is essential for both parties to understand borrower’s rights in any and all circumstances, including the offer and acceptance of a personal loan. The main borrowers’ rights include:
- The right to choose their loan – borrowers’ rights include their choice of what they feel is the best loan for their needs. That means the lender should not try to coerce consumers into taking a loan he likes.
- The right to full disclosure of costs and terms – borrowers’ rights include a full disclosure of all terms, conditions, fees and charges that you will incur during the life of the loan, and what you can expect in case of delinquency or default. The disclosure statement must be in writing and it must be presented to you before you sign anything.
- The right to a grace period – all borrowers are entitled to a grace period before they start to repay the loan. The length of the grace period and all other terms should always be included in the loan agreement.
- The right to cancel – as a borrower, you always have the benefit of a ‘cooling-off period’ of three working days, starting when you receive the disclosure statement. During this period you can cancel the contract, provided you haven’t spent all of the money.
- The right to full communication – A borrower has the right to be informed of any changes in the loan agreement, including the loan’s sale to another party. In that case, both parties are required to notify the borrower of the sale and transfer.
Lending and Borrowing Processes
Lending and borrowing are both processes that require a high level of cooperation between the parties. Just remember that both the lender and the borrower have obligations to meet under a loan agreement, so keep up your end of the bargain, as well. These rights are designed to make the process fair.
LOANS CONSOLIDATION FOR BORROWERS
Borrowing process is a crucial process since it involves complete cooperation between the lender and the borrower. Even if you seek help to manage debt, you have rights as a borrower.
Information A debt consolidation loan is a perfectly viable strategy for reducing your debt by paying them off. Debt consolidation is especially useful if your debt is mostly high-interest debt like credit cards. Since rates on personal loans tend to be far lower than rates on credit cards and other types of credit, when you consolidate all of your debts into one loan, you can reduce the interest and fees on many of your debts and also manage to pay all your debts with a single payment every month.
What Are Borrowers' Rights?
Borrowers' rights when they apply for a debt consolidation loan are much the same as the rights every other borrower has. Regardless of your reason for borrowing money, you have the same rights. Those include:
- The right to choose the best loan for you, without coercion from the lender or anyone else.
- The right to have the lender fully disclose the terms of the loan in writing before you sign the actual contract. You are entitled to accurate information as to the terms of the loan and how much the loan will cost you.
- The right to a grace period before starting to pay back the loan.
- The right to dispute information in your credit report.
- The right to have inaccurate information corrected or removed.
- The right to cancel the loan agreement within three working days after getting the written disclosure notice.
- The right to know that everything the lender will charge you for is directly related to the loan.
- The right to receive timely communications whenever the lender makes a change in terms of your loan.
- The right to ask the lender to change the terms of your loan in response to an emergency or some type of financial hardship.
The lending process is a critical process and it involves good faith and complete cooperation between the lender and the borrower. And while the borrower certainly has a responsibility to pay the loan back according to the terms of the agreement, borrowers also have rights when it comes to debt consolidation.
BORROWER'S RIGHT TO PRIVACY
Online lenders collect information about their borrowers when they apply for a personal loan. According to the law in force, every borrower can determine whether or how to limit the personal information.
Many financial institutions and lenders collect information about their customers during the regular loan application process. Consider the information you provide when you apply for a loan, including your name, physical address, your home, and cell phone numbers. A lot of information is collected about your employer, your job and income, as well as a lot of details about your sources of income and what assets you own. And that doesn't include the information on your credit report, which almost all parties who grant personal loans will gain access to.
Borrowers Have the Right to Control Their Information
According to the law in force, borrowers have an ultimate right to privacy. They can determine whether or how to limit the personal information that may be shared between their lender or financial institution and other companies.
Information The Gramm-Leach-Bliley Act of 1999 is a federal law that created all sorts of new opportunities for a borrower to limit any transfer of personal financial information to any outside party.
Finding the Perfect Balance
The purpose of the law was to find the right balance between the need of companies to share information in the normal course of business with each borrower's right to privacy. While it is true that some consumers don't have a problem with information sharing, and many actually like being on mail, telephone and email lists because it gives them access to the latest and greatest products, the decision should be up to the individual consumer, and not the lender or commercial partners.
Advice While many consumers discard certain mail their lender sends them without thinking, it's a better idea to actually read what they send you, since much of that mail includes an explanation as to how they use and share your personal information. Government officials strongly recommend that you read your lender's privacy notices, which sometimes come inside your statement, but which often come with statements or invoices.