Consumer credit contracts - loans 

Loans are a form of consumer credit contract, covered by the Credit Contracts and Consumer Finance Act (CCCFA). For general information about credit contracts visit our Consumer credit contracts - general information page.

The bank won’t give me a loan – what are other options for borrowing money?

Depending on your situation there are a number of options you can consider if you can’t get a bank loan:
  • Some charities provide no- or low-interest loans to people on low incomes. For example the Good Shepherd's Community Finance Scheme provides a No Interest Loan of up to $1000 for up to 18 months and a StepUP loan of $1000 - $5000 for a period of up to 36 months.
  • Finance companies – many have less strict lending criteria compared with banks, but can charge more in fees and interest.  Be wary of “payday” lenders, who specialise in short-term loans to people with poor credit history in return for high fees and interest charges. 
  • Pawn shop – a pawn broker can lend you cash if you leave goods in their shop as “security”. Although the pawn broker is not allowed to charge you fees on the loan, there’s no restriction on how much interest they are allowed to charge. We consider this a “last resort” option for borrowers.
The Sorted website has tips for choosing the cheapest loan.

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What is a 'secured' loan?

A secured loan is an agreement between you and the lender that they can take specific items of your property if you do not repay the loan (this is called 'security'). When certain items can be claimed this way it's called having "security interest" on them. You can find out more about what can be claimed as security interest (and what can't) on our consumer credit contracts general information page.

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My partner and I took out a loan so he could buy tools for work – now that we are no longer together could I be liable for the repayments?

Yes. If your partner’s name and your name are on the loan agreement (ie you have a joint debt) then either of you can pursued for the repayments. 

You could also be liable for a debt that is solely in your partner’s name, if it can be considered relationship debt. More about this is on the our Relationship property issues page.

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What protections are there for friends or family lending money to each other?

Loans between private individuals, where the lender is not in the business of lending, are not covered by consumer credit law.

If you are lending money to a friend or family member – or borrowing from them – it’s a good idea to formalise the loan agreement by getting the conditions of the loan down in writing, for example how much money is being loaned, how much interest (if any) is payable, when the repayments will be made and how much the repayments will be.

Disputes arising from the loan agreement are generally settled at the Disputes Tribunal.

Visit our Contracts between private individuals page for more information.