Loan documents set out rules you and your lender must follow until money is repaid in full.

What is a credit contract?

A consumer credit contract is a formal written agreement to borrow money, or pay something off over time, for personal use. You pay interest and fees for the use of the bank or finance company's money. One or more of your assets might secure the loan.

Examples include:

  • vehicle finance to buy a car, van, or boat
  • cash loan, also called a personal loan
  • mortgage
  • credit card or store card
  • agreed overdraft
  • credit sale (used to be called hire purchase) repaid over more than two months.

Rules in your contract must be in line with the law (see the model disclosure statement below for what information must be included). If not, you can apply to your lender to have your contract changed or cancelled. A free financial mentor or community lawyer can do this for you.

Before you agree to a contract

These are not consumer credit contracts:

  • buy now pay later, e.g. AfterPay or PartPay
  • layby
  • unauthorised overdraft
  • any credit contract for business use
  • loan or credit from a person or business that doesn't usually provide finance.

Different rules and rights apply.

Loans and lenders

Check if your contract has all required information

The model disclosure statement shows the information that should be your credit contract.

Model disclosure statement [DOCX, 33 KB]

What common contract terms mean

Borrowing money and buying on credit involves a lot of paperwork. Before you sign, the lender must:

  • help you understand the documents
  • help you determine affordability and suitability of the loan
  • give you time to get independent advice.

If not, they may be breaking lender responsibility rules — and you might agree to something unfair and/or expensive for you.

These definitions can help you, or anyone supporting you, understand the documents and check your lender's explanations.


If your problem is not the contract but keeping payments up to date, tell your lender as soon as possible. They may agree to adjust payments.

Payment problems

If things go wrong with your contract

If you think rules in your contract are unfair, or the lender has broken a rule, follow these steps — you might not need to do all three:

  1. Contact the lender: Talk to the lender or broker as soon as possible. Many issues can be solved at this step.
  2. Contact the lender's dispute resolution scheme: Get independent help to solve problems if you and the lender can't agree.
  3. Report the lender to the Commerce Commission: This government agency gathers information to identify lenders who break the rules. It doesn't take on individual cases but acts against lenders who often break the rules.

Example — Missing info

Jack buys a car on finance. One day his car won't start. A mechanic finds the immobiliser has been activated. But Jack didn't know the car had one. The mechanic explains how some lenders install disabling devices in vehicles used as loan security. Jack calls the MoneyTalks helpline to check if his lender can do this. Yes, but only if it's written in his credit contract. It's not. Because the lender left out this important information, they must update Jack's disclosure statement and refund all interest and fees Jack paid while it was incomplete.

1. Contact the lender

Before you make contact, read our information on:

  • your rights
  • how to complain.

A free financial mentor can help you prepare or can talk on your behalf. Start by contacting the free helpline MoneyTalks.

Contact information(external link) — MoneyTalks

Your rights

Under the Credit Contract and Consumer Finance Act a lender must comply with disclosure obligations and determine affordability and suitability of the loan. Failure to do so can result in a refund of interest and fees and or damages to the borrower.

Before and after you sign a credit contract for personal use, your rights are protected by the Credit Contract and Consumer Finance Act (CCCFA).

Here are some ways this law applies:

  • Rules in your contract must be fair and in line with relevant laws, including the CCCFA itself, Privacy Act, and Consumer Guarantees Act.
  • The lender must determine if the loan is suitable for you, and whether you can afford the repayments.
  • The lender must provide you with disclosure statements containing information about the contract.
  • The language used must be clear and understandable.
  • You can get independent advice — or simply take time to think — before signing.
  • Lenders must act fairly and in line with what's in the contract, e.g. when charging fees, or if you miss a payment.
  • Lenders cannot ask you to pay back more than twice the amount borrowed on high-cost loans.
  • Lenders cannot charge more than 0.8% of the unpaid loan balance in interest and fees per day when averaged across the loan term — and cannot charge compound interest on high-cost loans.
  • Default fees for missed payments on high-cost loans must be $30 or less.

If any of these are broken, apply to the lender to have the contract changed or cancelled.

Rights and requirements in your contract must not be unfairly weighted in the lender's favour. If a contract is extremely unfair — well beyond usual commercial practices — it might be what's called oppressive. You can take legal action against the lender.

Oppressive contracts [PDF, 830 KB](external link)  — Commerce Commission

For details on when a contract is and isn't legally binding, see:

Contracts and sales agreements: Your rights

Information you must be given

The most important part of your loan agreement or credit contract is the disclosure statement. This document must set out key information, including:

  • interest rate, how interest is calculated, default interest rate if you fail to pay
  • all fees, e.g. set-up costs, monthly admin fee, repossession costs
  • total amount to repay
  • any assets used as loan security, e.g. your home or car
  • what happens if you don't pay
  • how to apply for hardship
  • how to cancel
  • contact details for the lender and their independent dispute resolution scheme
  • any extras you agree to buy, e.g. payment protection, car breakdown insurance
  • for vehicle finance, if there's an immobiliser, how it works, and what to do if it's activated and you need the vehicle in an emergency.

Model disclosure statement

If you are not given full and accurate information, the lender:

  • cannot make you pay fees or interest during the time it was incorrect
  • cannot enforce other rules in your contract
  • may face penalties, e.g. pay compensation.

Right to cancel

You can cancel a consumer credit contract, but you must do this shortly after signing. It's usually within 5 working days — check your contract for time limits.

If you cancel, you must:

  • cancel in writing, by letter or email
  • repay any money the lender has given you
  • pay the cash price for what you bought, e.g. car or TV, within 15 working days.

If the lender did not give you a copy of key information (called the disclosure statement) — or that information is wrong, incomplete, or unreadable — you can cancel the contract at any time.

Cancelling means ending the agreement to borrow money or pay over time. You can't return what you bought unless it's faulty.

Example — Paying upfront

Chris buys a $1,000 fridge on credit. The store takes Chris through key points of the credit contract, including the right to cancel. Once the fridge has been delivered, Chris thinks it looks a bit small and asks to return it. But the store says no. With credit sales, only the agreement to pay over time can be cancelled after delivery — the agreement to buy the fridge stays in place. Reluctant to pay the $1,000 price tag in one go, Chris decides not to cancel the credit contract.

2. Contact lender's dispute resolution scheme

All banks, lenders and financial advisers must belong to a financial dispute resolution scheme. This independent body can:

  • give you information about how lenders should act
  • share tips on how to complain to your lender
  • look into certain complaints when you and your lender cannot agree on a solution.

It's free for you talk to them and make a complaint. Or a free financial mentor can do this for you. Start by contacting the MoneyTalks helpline.

Free confidential advice(external link) — MoneyTalks

There are four financial dispute resolution schemes. To find out which your lender belongs to, you can either:

  • Ask your lender.
  • Phone any one of the four schemes to find out. For contact details, see:

Financial dispute resolution schemes

You can also check the lender's entry on the Financial Service Providers Register:

Search the register(external link) — Financial Service Providers Register

3. Report the lender

The Commerce Commission enforces certain consumer laws, including the Credit Contracts and Consumer Finance Act. This is designed to make sure businesses lend responsibly, e.g. to check loans are affordable and disclose all interest and fees.

Commerce Commission doesn't act on behalf of individuals and can't investigate every complaint. But their investigations do help make sure businesses comply with the law. Your information helps them assess which consumer issues cause greatest harm.

Make a complaint(external link) — Commerce Commission

More help

Get support at any point from:

  • Community Law Centre: Free one-on-one legal advice for people with limited finances. The organisation has 24 centres throughout the country. You can find legal information and other resources on its website.

Our law centres(external link) — Community Law Centres

  • MoneyTalks: This helpline gives free budgeting advice to individuals, family and whānau. Financial mentors can help you understand your financial situation, organise your debt and plan. They can also put you in touch with a local budgeting service and help with issues you're having with lenders. Phone 0800 345 123, or use live chat, email, or text, if you prefer.

Contact information(external link) — MoneyTalks