Borrowing money

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Different methods of borrowing money
Paying back the loan
Credit Agreements

Different methods of borrowing money

There are many different ways that you can borrow money including:

• social fund loan - for further information contact Jobcentre Plus or look in the phone book
• family and friends
• bond committees and similar community schemes (ask in your local community, for example, places of religious worship)
• credit unions
• Community Development Finance Institutions (CDFIs)
• life insurance loan (with some types of investment-type life insurance, you may be able to borrow against the value of the policy)
• mortgage or secured personal loan
• credit card
• unsecured personal loan
• overdraft
• store card
• door-to-door lending.
  
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Paying back the loan

If you borrow money, you are going to have to pay it back at some pointl It is assumed that you will be able to meet the repayments which can often stretch long into the future so it is important to think about if you can manage the debt – whether you have a mental health problem or not. The Financial Services Authority (FSA) has a budget calculator that can help you to work out whether you have enough money to repay what you have borrowed. Also see types of borrowing at Money made clear from the FSA.

You should make sure you understand the terms and conditions you have agreed to when you borrowed the money and be confident that you will be able to repay according to those terms. In most situations where you borrow money you will enter into a Credit Agreement with the borrower.

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Credit Agreements

Credit Agreements are covered by the Consumer Credit Act 1974 and are limited to cover sums up to £25,000. If you have a loan, credit card or charge card you will have a credit agreement that outlines how you will pay for any money you borrow. If you do not keep to the terms of the agreement the organisation you borrowed the money from may sue you.

Credit Agreements are complex legal documents and you should read them carefully or get advice before signing them. You can get help with understanding Credit Agreements from an independent financial adviser (bearing in mind that they may charge you for the service, your local Citizens Advice Bureau or a national telephone helpline such as Consumer Direct (neither of which will charge you).

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