Under the law there are obligations for credit providers.  Three important features of the law are:

1.  Information that must be provided to consumers:

  • The initial unpaid balance.
  • The annual interest rate and a description of how the annual interest rate is determined.
  • The method of calculating interest charges.
  • The total amount of interest charges payable under the contract.
  • The description of the credit fees and charges.
  • Details of the payments required.
  • How to calculate the creditor’s loss on full pre-payment.
  • A description of any security interest.
  • Details of default interest charges and default fees.
  • A statement of the debtor’s right to cancel.
  • How often continuing disclosure statements will be provided.

2.  Interest charges, fees and early repayment:

  • Interest cannot be charged in advance.
  • Fees cannot be unreasonable. Any establishment fee must be the actual cost to the creditor.
  • A debtor has a right to full early repayment of the amount owing, which is calculated by taking into account the unpaid balance, actual administrative costs and a fee that is a reasonable estimate of the creditor’s loss.

3.  Remedies for Consumers:

  • There is a hardship provision where a debtor is unable to meet their obligations because of illness, loss of employment, end of a relationship and any other “reasonable cause”.  The debtor can request a variation of the terms on the basis that they can pay the varied amount. The options available are to extend the term of payment, a repayment holiday, or both. The debtor must not be in default at the time they claim hardship and it cannot have been reasonably foreseeable at the time the contract was entered into.
  • There are fines on creditors who trade if they have a dishonesty conviction or fail to provide proper disclosure of $30,000.00. The lender can also be forced to pay statutory damages of up to $3,000.00 on a failure to disclose interest rates.  

If you are thinking of entering a credit contract and want advice, feel free to call us for a relaxed and confidential initial chat.