Consumer Credit & Associated Insurances
Core concepts
Consumer credit questions test APR/APRC, credit agreements, hire purchase, personal loans, credit cards, overdrafts, and payment protection insurance (PPI). Know total cost of credit, early settlement, default, arrears, and cooling-off rights.
Understand secured vs unsecured lending, credit referencing, and affordability assessments. Know the Consumer Credit Act-style protections: pre-contract disclosure, right to withdraw, and complaint/ombudsman routes. For associated insurance, know PPI (covers repayments on illness/unemployment) and short-term income protection.
Traps
- Confusing APR (annualised rate) with monthly rate.
- Assuming PPI is compulsory - it is optional and often mis-sold.
- Forgetting early settlement may include a rebate or charge.
- Mixing secured (asset-backed) with unsecured lending.
Rule of thumb
Compare loans using APRC, not the headline rate - APRC includes fees and the true cost of credit.
Worked example
A €10,000 loan over 3 years at 8% APR costs more than the same loan at 8% with a €300 arrangement fee - the APRC captures that difference.