Changes in loan repayments planned

People who repay loans early will get a fairer deal under changes outlined by the government this week.

Around seven-in-10 personal loans are settled early, but people often have to pay big charges - charges which the government wants to scrap.

A new White Paper in the autumn will include plans to clampdown on loan sharks, magnify the small print of loan agreements and put a stop to irresponsible lending.

The changes will update the UK’s 30-year-old credit laws, which were introduced when the market was much smaller and simpler. In 1971 only one type of credit card was available, while now there are around 1,300 cards on the market.

Commenting on the proposals, Consumer Affairs Minister Gerry Sutcliffe said: "I want to ensure our credit laws meet the needs of a modern credit sector. They must protect consumers by tackling loan sharks, allow unfair loan agreements to be challenged, and ensure consumers know what they are getting themselves into when they sign on the dotted line."

Meanwhile, SDLP representative, John Dallat has urged local people to turn to their credit unions for their saving and borrowing instead of higher interest based lenders.

He said: "It is surely time for people to look seriously at joining their credit union and free themselves from the stranglehold of credit card companies and other expensive methods of borrowing money.

"It is very worrying that credit cards have made such inroads into the lives lives of ordinary people. Perhaps it is time the government compelled credit card companies to contribute to the cost of debt counselling which is now an essential part of helping people who have got into trouble with these money lenders."

(MB)