You may know that you have the right of withdrawal for all loans and credits you are granted? The deadline should be at least 14 days according to the Consumer Credit Act and it applies regardless of whether you apply for a loan or credit online, in a store or at the bank. But, did you know that there are banks that have extended their right of withdrawal for significantly longer than 14 days for their private loans? The law sets a minimum requirement for the borrower’s security, but on a voluntary basis, lenders and lenders can offer significantly more generous rules. Some lenders offer up to 60 days of cancellation rights.
Right of withdrawal or satisfied customer guarantee?
The banks and other lenders that today offer a repayment period that is significantly longer than two weeks usually call their offer for a satisfied customer guarantee or something similar. However, it operates in almost exactly the same way as the statutory right of withdrawal.
The differences that may exist are that repayments should be made within a certain number of days and that you as a borrower actually need to tell you why you want to withdraw the loan. Such provisions are not fully compatible with the right of withdrawal from the Consumer Credit Act. For example, the law stipulates that repayment should be made promptly and you have no obligation to explain. Note that the Consumer Credit Act rules apply for the first 14 days after the loan has been paid off. Only then will the satisfied customer guarantee come into effect.
What does the guarantee mean more specifically?
A satisfied customer guarantee means that the rules regarding the statutory right of withdrawal, with possible minor restrictions or changes, also apply after 14 days. This means that you as a borrower can cancel the loan at any time during the guarantee period. When you do so, you will, as in the case of the right of withdrawal, immediately become liable to repayment. Normally, you will have to repay the borrowed amount within five business days.
If you have already paid interest and repayments on your loan, you will be credited with this amount. It is simply deducted from your debt. If you make use of a guarantee, you are wise to investigate exactly what you have to pay back so as not to risk paying too little. If the entire amount does not reach the lender’s account on time, there is the risk that the bank considers that the guarantee does not apply.
What then is the case for any setup fees? When you cancel a loan within the statutory repayment period, all fees must be repaid. The basic idea is that the loan has never actually come into existence. However, when it comes to a satisfied customer guarantee, the lender is free to specify its own terms, which makes it difficult to give a general picture of what is applicable. With some lenders, you get the reimbursement fee refunded or credited, while others do not.
An interesting means of competition
Competition for borrowers is great and it is important to come up with new competitive advantages to keep up with the development. In our opinion, a satisfied customer guarantee is a clearly interesting addition to the arsenal of competitive means. This concept makes a loan a little safer in itself at the same time as it automatically gives the lender more goodwill.
At the same time, there may be fears that some borrowers see the extra security as something that significantly lowers the threshold for borrowing. It can be argued that the satisfied customer guarantee gets some who are thinking of borrowing to take the step a little easier.