Moneylending

[7.01] Introduction. Whilst this book is primarily about the retail supply of goods, adult consumers frequently press for early delivery with subsequent payment, typically by instalments. ¹ We have already seen ( para 2.16 ) that payment may be financed by either the retail supplier of the goods (vendor credit) or by a third party (lender credit), using a number of different methods. Some of these methods are, or involve, what in law amounts to a loan of money; others do not, e.g. an instalment credit contract (see para 1.03 ). ² If a loan contract is utilised, the two functions of a retail supply of goods and loan to the consumer may be separated. ³ Thus, a vendor credit transaction may be achieved by a cash sale and a separate loan contract between the same two parties (see para 2.19 ), whereas lender credit may involve a cash supply of goods financed by a loan from a third-party financier (see para 2.20 ). In either case, the funds under the loan contract (see para 7.02 ) may be transmitted in one of several ways: a

By a delivery of cash to the consumer. For security reasons, this method is likely to be used only in relation to relatively small sums of money. The consumerborrower may go to the lender, as where the consumer goes to a bank, building society or pawnbroker; ⁴ or he may go to the lender's ATM (see para 2.24 ). Or the lender may go to the borrower, as in home credit (see para 5.02 ).

b

By delivery to the supplier of a cheque or other instrument (see para 7.24 ), whether by hand or post. For instance, in loan financing the financier may post a cheque to the retail supplier.

c

By funding the consumer's existing current account (see para 2.17 ). At simplest, this might involve a clearing bank providing its existing customer with a personal loan (fixed-sum credit) or an overdraft facility (running-account credit): the customer may then access that credit by: i

drawing cash, usually by inserting a cash card in an ATM (see below);

ii

writing cheques, or utilising its modern equivalent, the debit card (see para 23.15 ).

d

By opening a new loan account for the consumer. Funds in the loan account may be accessible by furnishing the customer with a cheque-book (as in (c) above); but a more popular modern alternative is for the account to be operable by way of a payment card (see para 2.24 ), e.g. a cash card for use in an ATM, credit card, debit card or store card. Such new accounts are particularly common for regulated loans (see para 7.04 , et seq.).