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What is the Consumer Credit Act (1974)?

Secured loans and second mortgages are usually regulated by the 1974 Consumer Credit Act (amended in 2006). This page explains how you can tell if you are protected by the Act. If you are, your lender will have to go through an extra process if you get into arrears, before beginning repossession proceedings.

How do I know if I'm covered by the Consumer Credit Act 1974?

From April 2008, any loan you take out that isn't used to buy your home should be covered by the Consumer Credit Act, unless it's specifically exempted.

If you took out a loan before April 2008, it will only be regulated by the Consumer Credit Act if it was for less than £25,000 (or £15,000, if the loan was taken out before 1 May 1998).

If your loan is covered by the Consumer Credit Act, it should state at the top of the loan agreement, 'Consumer Credit Agreement regulated by the Consumer Credit Act 1974'.

Date loan was taken outAmount of loanConsumer Credit Act applies
After 6 April 2008Any amountYes
After 1 May 1998 and before 6 April 2008Up to £25,000Yes
Before 1 May 1998Up to £15,000Yes

You can find out more about secured loans.

What difference does it make if the loan is covered by the Consumer Credit Act?

If you can't keep up with repayments to a secured loan or second mortgage, the bank, building society or lender can take action to repossess your home. If the loan is covered by the Consumer Credit Act, you will have some extra time to sort the problem out before your lender can start repossession proceedings.

If your loan is covered by the Act, the lender must first send you a default notice. You may then be able to apply for a time order to stop repossession proceedings and give you an opportunity to clear your arrears.

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The important points

  • If you took out a loan after 6 April 2008 that was not to buy your home, it will be regulated by the Consumer Credit Act.
  • Before they can begin repossession proceedings your lender needs to go through an extra process if your loan is regulated by the Consumer Credit Act.
  • If you're eligible, when your lender sends you a default notice, you can apply for a time order to stop repossession so you can clear your arrears.

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