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
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.