Applying for a loan online is a safe and easy procedure. That is why in this article we want to show you everything you need to know about the legal regulation of oline credits. Learn about the laws that protect us as individuals and why you can rest easy with these procedures.
- What is the legal regulation of online loans?
- Lenders' Obligations
- Online loan customer rights
- 1. Early Amortization
- 2. Cancellation of Online Credit
- 3. Claim for improper charges
- 4. Receive the contract information in its entirety
- 5. Right to a binding contract
- Microloans and their legal regulation
Online credits can get us out of a hurry or solve an emergency situation, since they represent a quick way to earn money. These processes involve much simpler procedures than a traditional bank loan and, normally, their conditions are very flexible.
If you are in United States and you want to apply for an immediate loan online , you should know that there are regulations that formalize this process and, in addition, protect you as an individual. Keep reading and learn more about the most important aspects you should know about the legal framework of this type of financing.
What is the legal regulation of online loans?
In the United States, this regulation consists of the entire legal set of security, protection and transparency guarantees that the online credit procedure offers its users. In addition, you will be able to find all the consumer protection measures for everyone who requests financing online.
If you are going to apply for a credit online, it is important that you go to entities that comply with current legislation, offering transparent and secure operations . Some of the laws that regulate these processes in the United States are:
- Royal Legislative Decree 1/2007. It is a general Law for the Defense of Consumers and Users.
- Organic Law 15/1999 on the Protection of Personal Data.
- Law 34/2002. It is one that regulates the services offered by Internet and electronic commerce.
- Law 34/1988. This is the General Advertising Law .
These are the most important obligations of lenders, stipulated in the Legal Regulation of Online Credits:
- Provide all the information about the loan.
- Explain in detail the Nominal Interest Rate (TIN) and the Annual Equivalent Rate (APR) .
- Expose all the administrative, opening, case study, contract modification, etc. commissions.
- Links of other services.
Online loan customer rights
All companies that provide online credits greater than 200 us dollars, must guarantee their users the following rights stipulated within the Legal Regulation of Online Credits:
1. Early Amortization
If you are able to repay your debt before the term ends, you have the right to repay your loan early. In this case, the company can accept this procedure for free or apply a commission that cannot be greater than 0.5% of the money returned.
However, there are many companies that admit an early amortization for free , with which you end up saving the commissions and interest that you had to pay for the days you had left to complete the term.
2. Cancellation of Online Credit
If after an emergency, you started an online credit application, but you found a way to get the money and you want to cancel your procedure, you have 14 calendar days to cancel the contract with the lender.
Within this period, the company cannot penalize you in any way or apply any commission . All you have to do is return the money that has been loaned to you and pay the interest generated from the day you received the money, until the day you return it.
3. Claim for improper charges
You have the right to issue a formal claim, if you consider that the company is executing an improper charge in the process.
4. Receive the contract information in its entirety
The lending company is obliged to provide the client with a copy of the contract where all its conditions appear , as well as the interests and commissions that take place.
This information must be truthful and transparent, without ambiguous or misleading criteria. It is important that it be presented in clear language so that the user can understand everything correctly and determine if it is an offer that interests them or not.
The information provided by the lender must consider aspects such as:
- Loan amount.
- Repayment period.
- Value of the monthly fee .
- Total amount to be paid at the end of the term.
- Breakdown of interest, as well as the Nominal Interest Rate (TIN) and the Annual Equivalent Rate (APR).
- All the commissions mentioned above.
- Penalties for non-payment to know what would happen in case of being late with a fee. Here they must specify what percentage they would apply to default interest or if they will charge some type of commission for claim.
- Links and related conditions if there are products or services associated with the contract.
5. Right to a binding contract
If you wish, the lender has the obligation to establish and deliver you a binding contract with the terms that have been agreed in the agreement. This contract must be valid for at least 14 days.
Your rights when contracting an Online Loan
- You should receive a legible and detailed contract from the company.
- Make sure you can locate the TIN, APR, interest and commissions.
- You can withdraw from the agreement during the 14 days following the signing of the contract.
- You can claim for undue charges.
- You can have a binding contract if you contract additional services such as insurance, cards, etc.
Microloans and their legal regulation
The Spanish Association of Microloans (AEMIP) imposes certain regulations on these types of markets, protecting the reputation of the companies that provide these services and taking care of user rights. This association has stipulated the following measures:
- Code of good practice
The companies registered in the AEMIP have a quality seal that reflects their commitment to maintaining the safety of users and following all the measures established in this code, acting honestly, efficiently, responsibly and ethically. One of the conditions is transparent advertising and clear communication with your customers.
- Self-protection file
The legal regulation of online credits raises this resource designed to protect users from excessive indebtedness due to the request for microloans . If you want to avoid falling into this situation, you just have to register in the file, which indicates that your profile will not be suitable to contract loans with associated entities, at least for two years.
You can unsubscribe at any time if you want to be eligible again by the companies to receive a microloan.