Credit Agreements
Standard Agreement Components
Credit agreements contain several standard sections: parties to the agreement, credit amount and purpose, interest rate and calculation method, total amount repayable, repayment schedule, security requirements, default provisions, termination rights, and governing law. Each section has legal significance and affects your obligations.
Key Clauses to Review
Pay particular attention to: early repayment terms (including any penalties), default definitions and consequences, variable rate provisions (if applicable), fee structures, notice requirements for changes, and dispute resolution procedures. These clauses often contain the most significant cost and risk implications.
Cooling-Off Periods
For agreements concluded at a distance or away from business premises, you typically have 14 days to withdraw without penalty. This cooling-off period starts when the agreement is made or when you receive the terms, whichever is later. Some products, like short-term loans, may have different or no cooling-off provisions.
Default Consequences
Default provisions specify what constitutes a breach (usually missed payments), the lender's remedies, and your rights. Remedies may include demanding immediate full repayment, charging default fees, reporting to credit reference agencies, and legal action. Understand these consequences fully before agreeing.