Finance regulation is a set of laws, policies, and regulations which surround the financing market. Most of these laws exist as federal regulations. A smaller percentage of these laws are created as local or state regulations and may not apply outside of the affected state. These policies are designed to protect both the lenders and the borrowers. The main goal of these regulations is to prevent misconduct in relationship to financing any form of purchase. This can include stipulations which would allow for unfair additional charges and preventing borrowers from defaulting on a loan and avoiding potential consequences.

There are a number of reasons that such regulations need to exist. The most obvious reason is to protect the borrower from a lender who is trying to take advantage of buyers. Some lenders may attempt to build in stipulations and conditions which are designed for the purpose of taking money from borrowers. To prevent this, a number of finance regulations exist which outline acceptable practices for things such as late payments and missed payments. These regulations allow a borrower who has been a victim of some of these illegal actions to take action to avoid paying unfair penalties.

These regulations are also designed to protect the banks and lenders from borrowers who attempt to defraud the lender in some fashion. This can include a number of different circumstances. Typically these regulations set forth actions which a bank or lender can take in case of missed payments or the borrower fully refusing to make a payment. In the past 5 years a few new regulations surrounding financing have also been put in place in regards to bankruptcy. These new laws and regulations are designed to protect the lender or bank in the event that an individual who has borrowed money files for bankruptcy. The biggest change is in regards to a home mortgage which was designed to allow the bank to still foreclose on most properties even after an owner has declared bankruptcy. This was put in place to combat the growing number of people who were declaring bankruptcy as a method of not paying off large purchases.

While these laws do allow a higher level of protection to both the lender and the borrower it is still recommended that anyone looking to take a loan out take the time to read a contract, including the conditions which exist for any form of default, and fully understand the terms. For people who may have trouble fully understanding the loan contract it is also recommended that a lawyer be contacted who will be able to explain the contract. This will help to ensure that the borrower does not enter a legal contract which may not be advantageous to them. It is also important that a person understands what finance regulation exists within their given area. This will help them to determine if any of the stipulations in the contract are illegal. This can go a long way towards helping a buyer to make an informed, intelligent decision which is less likely to have unexpected consequences in the future.