Understanding Personal Loans: Your Rights Under the Credit Code

Personal Loans And The Consumer Credit Code

What should I know about personal loans and the Consumer Credit Code?

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Understanding your rights as a consumer is essential in dealing with complex issues like personal loans and other finance. Here we reveal, in simple terms, how the Credit Code works for you.

Introduction of Credit Code

The Consumer Credit Code commenced operation on November 1, 1996.

This is a national code that is applicable in each State.

Despite what its title suggests, it is not a code of conduct but legislation that is enforceable in certain situations where credit is offered.

Any non-business credit transactions are governed by the Code if entered into after that date, including continuing contracts that were in force at that date.

This includes:

credit provided predominantly for domestic, personal or household purposes;
where a charge is made for the credit; and
Insuring your most valuable asset

While many people would consider their home or their car to be their most valuable asset, it's your ability to earn an income that is most important in shaping your financial future. Statistically, two thirds of working Australians will suffer an injury or illness that will sideline them for 90 days or more. The majority of these people would not be able to pay their mortgage or meet car finance and other loan commitments without adequate income insurance.

... compare rates & options ...

credit is provided in the course of a business of providing credit, or incidental to any other business of the credit provider. Definition of credit contract The Consumer Credit Code covers a wide range of credit contracts, which is defined as:
the payment of a debt owed by one person to another is deferred; or
one person incurs a deferred debt to another. Different categories of credit under the Consumer Credit Code include:
instalment contracts;
consumer leases;
continuing credit.

The Consumer Credit Code covers credit contracts entered into after November 1, 1996 including:

all consumer credit e.g. credit cards, housing etc loans that are characterised as being domestic, personal or household - not for business purposes;
in all Australian jurisdictions;
where charges are made for the credit;
where the credit provider does so in the course of business.

Personal, domestic & household purposes

The Consumer Credit Code does not apply for business purposes.

According to the Code the nature of the credit does not have to be wholly concerned with domestic credit, but will be caught by the provisions of the Consumer Credit Code if:

more than half the credit is for personal, domestic & household purposes; or
if the credit is to purchase goods that are to be used for different purposes, then the purpose is mostly for personal, domestic & household purposes.

Goods mortgages

Mortgages are a security over goods (sometimes called "chattels") or real property.

This means that the lender has the right to take the property/goods and sell it if the borrower defaults on the loan.

There are certain requirements that must be met before the mortgage comes under the Consumer Credit Code, including that the goods or land must be specifically described.

Applicable credit providers

For a credit contract to be covered by the Consumer Credit Code, the credit provider must supply the credit:

in the course of a business that provides credit; or
where it is incidental to any other business of the credit provider.

There is no hard and fast way to determine this, but it can be important where the seller simply allows the buyer to pay for the goods in instalments, or when a family member offers a loan.

In the first case the contract would probably be covered by the Consumer Credit Code; in the latter case it would not be covered.

Exclusions from the Consumer Credit Code

This can be complicated, and it is always worth asking whether the contract is covered by the Consumer Credit Code. There are many situations where the Consumer Credit Code will not apply, including:

short term credit;
where credit provision occurs without contemplation e.g. a savings account goes into debit;
within certain limits, where the only charges are periodic or fixed and not changed according to the level of credit that is provided e.g. an annual fee to a credit card provider or a arrangement with a supplier that allows goods to be bought on account and a fixed charge is applied;
insurance premiums payable on instalment;
most pawnbroker transactions;
employee loans.

Credit Code & guarantees

A guarantee must be:

in writing;
signed by the guarantor;

A copy of the credit contract must be received by the guarantor.

They must also receive a copy of a document that sets out the obligations of the guarantor under the contract.

Published: Sunday, 1st Aug 2021
Author: Paige Estritori

Truck Loans Articles

The Pros and Cons of Leasing vs. Buying a Truck for Your Business

Small businesses that require regular transportation of goods may find it essential to purchase a truck. However, this acquisition can become a significant investment that requires careful consideration before making a decision. The two options available are buying or leasing a truck. In this article, we will explore the pros and cons of each option to help you make an informed choice. - read more

Understanding Credit Scores and Their Impact on Your Commercial Vehicle Loan Terms

Finding the right financing for a commercial vehicle in Australia can be a critical step for businesses and individuals alike. Whether it's for a single van or an entire fleet of trucks, understanding the intricacies of commercial vehicle loans is key to securing a deal that aligns with your financial goals. One factor that stands out in determining your loan terms is the credit score—a numerical representation of your creditworthiness. - read more

The Most Important Factors to Consider When Buying a Truck

Buying a truck is a major investment, whether it's for personal use or business purposes. With the plethora of options available in the Australian market, it's important to consider various factors before making a purchase. Your specific needs, budget, lifestyle, and work requirements should be taken into account before making a decision to ensure the truck you buy fits your needs. - read more

Maximizing Your Investment: Strategies for Enhancing Truck Resale Value in Australia

The commercial vehicle market in Australia is a cornerstone of the transportation and logistics industries, with trucks playing an indispensable role. Whether for long-haul deliveries across the vast distances of the continent or for urban distribution, trucks are critical assets for businesses and entrepreneurs alike. This significance makes it essential for commercial vehicle buyers to understand the dynamics of truck resale values in Australia. - read more

Why a Pre-Approval Can Give You an Advantage When Buying a Truck

When purchasing a truck, whether for personal use or business, navigating the financial landscape can be daunting. This is where pre-approval comes into play. But what exactly does pre-approval mean in the context of buying a truck? - read more

Finance News