Lending responsibly to Members
31 Jul 2015
On the 6th of June, the amended Credit Contracts and Consumer Finance Act 2003 was enacted and alongside this the Responsible Lending Code came into effect.
So, how does this affect you?
In a nutshell, it means that all lenders must now comply with lender responsibility principles which cover things such as advertising which can't be misleading, full assessment of the borrower's ability to repay a new loan - including the existing expenses they already have, and it also outlines how the lender must behave if borrowers find themselves in substantial hardship during the term of a loan.
What should you expect when you next apply for finance?
You should have to provide a full application that details your present financial position - what do you own and owe, why you need the loan, and what are your existing living expenses, including any other debt repayments and fixed expenses you may have.
Lenders need to be up front about all their criteria, and you have every right to enquire and understand their criteria and rules along with any conditions around interest free periods, interest rates, penalties and fees that can be charged.
What happens if I can't afford the loan after I've taken it out?
Firstly, it is critical that you talk to your lender as soon as possible. They then should work through some different options with you that will allow you to get back on top of things - financially.
Remember, knowledge is power. If you don't know or understand something, simply ask.
Stay safe out there!
Talk soon . . .