/24-7PressRelease/ - WATFORD HERTFORDSHIRE - September 30, 2006 - Borrowers who pay back a loan before the set period are charged with early repayment penalties. A recent amendment in the Consumer Credit Act restricted the extent of penalties to two months rate of interests.
London (online-unsecured-loans) September 19th 2006:- The penalties charged on repayments of various loans are not a good way of reducing debts, according to one of the provider in UK. Early repayment penalties are charged from borrowers who pay back a loan, whether a secured or an unsecured loan, before the predetermined period. Borrowers who do so are charged with early redemption fees, financial penalties and redemption charges all describing the same charges.
While the amendment in the Consumer Credit Act recently restricted the size of penalties to two months rate of interest, Zopa has called for complete withdrawal of the fees.
James Alexander, spokesperson for Zopa, said: "Early repayment penalties are a classic example of self-serving sharp practice by the financial services industry, designed to protect and increase profits at the expense of encouraging customers to do the right thing with their money."
He further adds that law should ban the practice completely with exit penalties on pension transfers, as people are struggling with huge personal debts.
People in UK currently owe more than 1 trillion in personal debts, which resulted in a 10.5 per cent increase from the last year.
Citizens Advice recently cautioned that around 770,000 people who have taken mortgages have missed more than one repayment last year
For futher information contact : http://www.online-unsecured-loans.co.uk
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