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Understanding Consumer Sales and Credit
Sep 17, 2024
Lecture Notes: Consumer Sales and Credit
Introduction to Credit
Definition
: An agreement allowing a borrower to receive goods/services before payment, with a promise to pay later, usually with interest.
Types of Credit
:
Credit Cards
Mortgages
Student Loans
Car Loans
Payday Loans
Usery
Definition
: Charging excessive interest, regulated by state laws.
State Law Approaches
:
Forfeit excessive interest.
Forfeit entire interest if usurious.
Forfeit principal and interest if usurious.
Example (California)
: Excess interest forfeited over 10% on personal loans.
Payday Loans
Basics
: Known as deferred deposit transactions.
Regulation
:
Overseen by the California Department of Business Oversight.
Maximum loan: $300 with a 15% fee.
Impact
: High compounded interest rates; average borrower debt: 5 months with $520 in fees for $375 loans.
Important Consumer Credit Laws
Truth in Lending Act
: Requires disclosure of credit terms to borrowers.
Consumer Leasing Act
: Similar disclosures for leases over $25,000 for >4 months.
Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act)
:
Protections for credit card holders.
Increased maximum interest rate to 30%.
Equal Credit Opportunity Act
: Prohibits discrimination in credit transactions.
Fair Credit Reporting Act
: Specific disclosures for credit seekers.
Fair Credit Billing Act
: Protects against billing errors, facilitated by the CARD Act.
Additional Consumer Purchase Protections
Warranties
:
Express Warranties
: Affirmation of product performance; can be oral or written.
Implied Warranties
:
Merchantability
: Goods fit for ordinary purpose.
Fitness for a Particular Purpose
: Seller assures product is fit for a specific use.
Exclusion of Warranties
:
Written warranties cannot be disclaimed.
Implied warranties can be disclaimed using terms like "as is" or "with all faults".
Conclusion
Consumer protections are statutory and warranty-based unless disclaimed.
UCC governs warranty protections; statutory law governs Consumer Credit protections.
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Full transcript
Lecture Notes: Consumer Sales and Credit
Introduction to Credit
Definition
: An agreement allowing a borrower to receive goods/services before payment, with a promise to pay later, usually with interest.
Types of Credit
:
Credit Cards
Mortgages
Student Loans
Car Loans
Payday Loans
Usery
Definition
: Charging excessive interest, regulated by state laws.
State Law Approaches
:
Forfeit excessive interest.
Forfeit entire interest if usurious.
Forfeit principal and interest if usurious.
Example (California)
: Excess interest forfeited over 10% on personal loans.
Payday Loans
Basics
: Known as deferred deposit transactions.
Regulation
:
Overseen by the California Department of Business Oversight.
Maximum loan: $300 with a 15% fee.
Impact
: High compounded interest rates; average borrower debt: 5 months with $520 in fees for $375 loans.
Important Consumer Credit Laws
Truth in Lending Act
: Requires disclosure of credit terms to borrowers.
Consumer Leasing Act
: Similar disclosures for leases over $25,000 for >4 months.
Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act)
:
Protections for credit card holders.
Increased maximum interest rate to 30%.
Equal Credit Opportunity Act
: Prohibits discrimination in credit transactions.
Fair Credit Reporting Act
: Specific disclosures for credit seekers.
Fair Credit Billing Act
: Protects against billing errors, facilitated by the CARD Act.
Additional Consumer Purchase Protections
Warranties
:
Express Warranties
: Affirmation of product performance; can be oral or written.
Implied Warranties
:
Merchantability
: Goods fit for ordinary purpose.
Fitness for a Particular Purpose
: Seller assures product is fit for a specific use.
Exclusion of Warranties
:
Written warranties cannot be disclaimed.
Implied warranties can be disclaimed using terms like "as is" or "with all faults".
Conclusion
Consumer protections are statutory and warranty-based unless disclaimed.
UCC governs warranty protections; statutory law governs Consumer Credit protections.