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Explain how borrowers are protected by the Consumer Credit Act (1995) - Leaving Cert Home Economics - Question 11 - 2010
Question 11
Explain how borrowers are protected by the Consumer Credit Act (1995). Give two points. (i) (ii)
Worked Solution & Example Answer:Explain how borrowers are protected by the Consumer Credit Act (1995) - Leaving Cert Home Economics - Question 11 - 2010
Step 1
(i) Credit advertisements must show APR, deposit required, instalments, extra charges, restrictions, cash price, total cost of credit etc.
Answer
Under the Consumer Credit Act (1995), borrowers are provided with transparent information through credit advertisements. This ensures that borrowers are aware of the Annual Percentage Rate (APR) and all associated costs before entering into a credit agreement. By having access to clear details such as the required deposit, repayment instalments, any extra charges, and restrictions, borrowers can make informed decisions about their financial commitments.
Step 2
(ii) 10 day 'cooling off' period; credit agreements must be in writing, costs and penalties must be outlined;
Answer
The Act also establishes a 10-day 'cooling off' period during which borrowers can reconsider their decision without penalties. Furthermore, all credit agreements are required to be provided in writing, ensuring that all costs, penalties, and conditions are clearly stated. This practice discourages unfair lending practices and promotes openness and transparency for consumers, which further protects their interests.