Borrowing money is something that is often done at a time when emotions are running high, whether it is the joy of finding a dream home or the desperation of needing money to pay for unexpected expenses. Looking at the fine print of a credit contract can easily get overlooked at these times. It is therefore important to understand your rights under the various Acts of Parliament that protect borrowers. Your principal protection comes through the Credit Contracts and Consumer Finance Act, 2003, which is currently undergoing a major review.
Under current legislation your basic rights include:
- Creditors must tell you the truth.
- Any fees including administration and default fees must be reasonable.
- You have the right to repay early
- The contract can’t be harsh or oppressive
- You can cancel in the first few days
- You can ask to change your payments if you suffer unexpected hardship.
More information on your rights is available in a booklet published by the Ministry of Consumer Affairs called ‘Credit: What you need to know when borrowing money or buying goods on credit’, which can be downloaded here.
The Consumer Credit and Financial Services Law Reform Bill, which has now gone through its third reading in Parliament, introduces a wide range of changes, including:
- Introducing a Responsible Lending Code for lenders
- Better disclosure of loan terms and extending the ‘cooling off’ period for borrowers
- Lenders must provide free of charge their standard form contract terms and costs of borrowing
- Preventing goods from being repossessed unless they are specifically identified in the credit contract
- Licensing of repossession agents and employees.
It is hoped that these changes will prevent unscrupulous lenders from preying on desperate people.