Britons, facing early repayment penalties on loans

Early repayment penalties are detrimental to the interests of the consumers who try to do the right thing with their money. This practice of financial services industry is essentially designed to protect and increase its own profits at the expense of the consumer. This practice should, be banned by ministers instead of limiting the present size of penalties by the Consumer Credit Act to two month's interest.

London (online-unsecured-loans) September 21, 2006: Repayment penalties on loans are charged from people who pay back loans before the end of its term. The penalties come variously as early redemption fees, redemption charges and financial penalties. This serves the interest of the financial services industry only as it penalizes the vigilant customers who like to do the right thing with their money. They should, in reality be encouraged and not penalized.

A spokesperson for Zopa, Mr James Alexander says, "Early repayment penalties are a classic example of self-serving sharp practice of the financial services industry, designed to protect and increase profits at the expense of encouraging customers to the right thing with the money." This is very harsh on the customers whose personal debts have increased by 10.5 per cent in one year- a stupendous 1 trillion pound.

Moreover, 770,000 people with mortgages, warned Citizen Advice, had missed one or more of their repayments in the last twelve months. The Consumer Credit Act recently limited the size of penalties to two months interest but Zopa calls for a total ban on this practice in the consumer's interest.