Consumer Credit Contracts – your rights

by The Findlaw Team

Today consumers are bombarded with invitations to buy products now and pay later, often on what appear to be attractive terms – buy now and pay nothing for some months, or buy now and pay no interest for an even longer period. This form of marketing is aimed at increasing sales, and results in consumers purchasing items when they do not have the money at the time they want to buy. Where a consumer enters an agreement to purchase an item on credit – that is, where they don’t have to pay for the item straight away, but over an agreed period of time – this type of arrangement is called a consumer credit contract and is governed in New Zealand by the Credit Contracts and Consumer Finance Act 2003 (“CCCFA”).

The CCCFA aims to protect consumer interests, provide for disclosure to the consumer of information about the credit contract, make rules about interest charges and payments and prevent oppressive credit contracts.

Disclosure

Creditors (those providing the credit to you the consumer (the debtor)) are required to give you certain information either before or within five working days of signing the contract. This is called initial disclosure and includes the credit limit, the annual interest rate they will charge, the interest free period, any credit fees and charges, the amount of payments you have to make and how they are calculated, when the first payment is due and the frequency of payments, what the default charges are, and information about your right to cancel the contract and the time period within which you can do so.

In most cases, you also have to be provided with other information on a regular basis, which usually comes to you in form of a statement with opening and closing balances, a record of your payments, the interest rate and the period covered by the statement, along with other information.

You must also be given information about variations to the contract. The consumer credit contract itself may contain a clause giving the creditor the right to vary the contract in respect to certain things – and they still have to inform you of the variation within 5 working days of the change taking effect.

At any time during the course of the consumer credit contract, you or your guarantor can request certain information from the creditor such as the amount required for full prepayment at a specified date and how that amount is calculated and what the unpaid balance is, including the amount of any interest charge outstanding.

Disclosure of the above information must be done in writing and in a way that will bring the information to the attention of a reasonable person (in other words - not in tiny print at the bottom of the last page of the document). The disclosure can be emailed to you if you consent to that form of notice.

Cancellation

Consumers who enter into consumer credit contracts do have rights to cancel a contract but must do so within specific time periods and in the manner described in the CCCFA. Any cancellations must be in writing. You can cancel the contract within 3 working days of receiving initial disclosure from the creditor, or, if you did not receive initial disclosure, you can cancel the contract at any time. You must also either pay the full amount owing under the contract or repay any advance and any other property you received from the creditor.

 
This article does not contain all the information you should know about entering into or cancelling consumer credit contracts. If you have any issues relating to consumer credit contracts or any other related consumer inquiry, please seek the help of a lawyer who will be able to assist with any questions you may have.



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