Know who you're dealing with
Reading a contract can seem too hard (or too boring), but don't
avoid it or put it off. It's essential to know what you're signing
up for before you go ahead with a credit card, loan or consumer
lease. You also need to know who you're getting the credit from and
how they are charging you.
How to check a credit contract
Before you sign a contract for a credit card, loan or
lease, check the following:
- The name of the business or person lending you the money or
leasing you the goods
- Details of the loan or consumer lease,
including the need for you to offer an asset as security
- How interest is calculated and charged
- Fees and charges and any commissions and
- What happens if you can't meet your repayments - will you be
charged a higher rate of interest or extra fees?
- If and when you'll receive account statements and how you will
be told of any changes to the terms and conditions of the
Case study: Marianna gets a better deal
Marianna is looking for a personal
loan to help pay off her kitchen renovations. To make sure she gets
a good deal, she checks the comparison rate for her top two loan
choices. However, she knows that the comparison rate does not
include certain charges, such as early termination fees.
To find out all the fees she has to pay, Marianna reads the
credit contracts of the two loans. She finds out that Loan A
charges a higher fee than Loan B if she pays off her loan early.
Marianna decides that Loan B is a better option for her.
Check if your credit provider is
Credit providers and brokers that are not licensed are
operating illegally in Australia. Make sure you only deal with
a company or person who is licensed.
Search ASIC Connect's Professional Registers to check
your credit provider has been licensed or you can phone
ASIC's Infoline on 1300 300 630.
Find out more about the law and consumer credit
Do you need consumer credit
Consumer credit insurance covers you if you can't meet the
repayments on your credit contract or loan because you are out
of work, sick or injured. The benefits, limitations and costs of
this insurance can vary - and the cover offered by the credit
provider might not be the cheapest you can get.
You can ask that consumer credit insurance be removed from your
contract before you sign it.
Check if consumer credit insurance is included in a credit
contract before you sign. Some credit providers include it and
others don't. You can't be forced to have this insurance and in
many cases you may not need it.
For more information, take a look at our consumer credit
Your credit contract will give you the
information you need to decide if the deal is worth it. If you
don't understand something in the contract, ask your credit
provider. It's better to be safe than sorry when it comes to
Last updated: 06 Oct 2017