Consumers and Credit Disclosures: Credit Cards and Credit Insurance
Credit
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Credit What you need to know when borrowing money or buying goods on credit
description
Transcript of Credit
CreditWhat you need to know when borrowing
money or buying goods on credit
Why should I read this pamphlet?
This pamphlet covers the important things you need know as a
consumer when you’re borrowing money or buying goods on credit.
You’ll fi nd out about:
• your rights before and after you sign a contract
• what sellers and lenders have to tell you, and when
• what a contract must include
• what’s required of you
• where you can go for help.
The pamphlet is a guide for consumers who enter into credit contracts from 1 April 2005. The law that covers
these contracts is called the Credit Contracts and Consumer Finance Act 2003.
If you signed a contract before 1 April 2005, check out our pamphlet ‘Hire Purchase – A guide for consumers’,
or our factsheet ‘Cash Loans’. Both are available from your local Citizens Advice Bureau – phone 0800 FOR CAB
(0800 367 222) – or on our website at www.consumeraffairs.govt.nz.
Contents
Credit contracts and loans 5
What’s in a contract? 8
What you have to do 11
Problems with credit 13
How to deal with a problem 21
Other helpful information 23
Disclaimer
The Ministry of Consumer Affairs has produced this pamphlet as a general guide for consumers about the Credit Contracts and Consumer Finance Act.The pamphlet sets out the Ministry’s interpretation of the Act. The pamphlet should not be used as a substitute for specialised legal advice.
Did you know? See page
• Buying goods on credit costs you more than the cash price 5
• You have rights, even after you’ve signed a contract:
- in some cases you can change the contract terms 15
- in some cases you can cancel the contract 11
- you can repay your loan or credit early 12
• The lender has to give you information about your contract 9
• You might not have to pay all the charges of your credit
sale or loan contract if you don’t receive all the contract
information within the required time 9
• Goods on credit will probably have to be insured 14
• Lenders can only charge you reasonable fees 9
• There’s no limit on the interest rate 5
• There are things you can do if you can’t keep up payments 14
• Lenders can take back the goods or your security if you
don’t keep up with your payments 16
• You have rights when lenders take back goods 17
Word Watch
These are some of the terms you’ll fi nd used in this pamphlet.
Consumer A person who buys or acquires goods or services usually bought for personal, Consumer A person who buys or acquires goods or services usually bought for personal, Consumerdomestic or household use.
Contract A legal agreement – eg, between you and another party for the supply of goods or services such as a credit contract.
Credit The amount of money you’re borrowing. Credit can be:
• a loan, including cash loans
• where you’re buying goods that you’ll pay off later
• using a bank or store credit card to buy goods and services.
Credit contract A contract that sets out the terms and conditions of the seller or lender providing the credit.
Credit sale A type of credit contract where you buy goods with the right to use them and pay them off later – eg, by making monthly payments (instalments). This used to be called hire purchase.
Disclosure statement Written information provided as part of your credit contract. It sets out key information about your loan or credit sale – eg, payment information.
Finance company A company that lends you money or provides the credit for sellers offering Finance company A company that lends you money or provides the credit for sellers offering Finance companycredit sales.
Guarantor A person, such as a friend or family member, who agrees to ‘guarantee’ the credit Guarantor A person, such as a friend or family member, who agrees to ‘guarantee’ the credit Guarantor– that is, take responsibility for paying off your loan or goods if you can’t.
Goods The things you buy – eg, cars stereos, carpet. ‘Consumer’ goods are goods usually bought for personal or household use.
Hire purchase The old term for ‘credit sale’. The new term applies from 1 April 2005. (See ‘Credit sale’ on page 5.)
Lender The company or organisation providing you with credit – sellers, fi nance companies, Lender The company or organisation providing you with credit – sellers, fi nance companies, Lenderbanks, money lenders.
Loan Money you borrow from a bank, fi nance company or other source. A loan is a form of credit contract.
Revolving credit Credit cards use a revolving credit system. You’re given a maximum amount of credit you can use, and have a set minimum monthly payment to meet. You can choose to use some or all of the total credit available, as long as you make regular payments.
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Security interest A right a lender may have over your goods – either your own goods you list as security when borrowing money (see ‘Secured loan’), or goods you’re buying under a credit sale. This right allows the lender to seize and sell the goods if you don’t keep up your payments.
Secured loan A loan where the lender asks you to list goods you own (such as a car or household goods). If you fail to repay what you owe, the lender can seize and sell the goods to pay off your debt to them.
Seller The company or trader selling you the goods under a credit sale – eg, a retailer.Seller The company or trader selling you the goods under a credit sale – eg, a retailer.Seller
Unsecured loan Where you don’t have to provide any security for the loan – eg, some personal loans from banks or credit card services.
You might not have to pay all the charges of your credit sale or loan contract if you don’t receive all the contract information within the required time.
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What is credit?
Credit is when you borrow an amount of money and don’t have to pay it back straight away. Usually you pay the amount back in regular instalments (payments). The total you repay will cost more than the amount you borrowed because you may also have to pay:
• extra costs in arranging the credit, such as documentation fees, administration costs or booking fees
• interest on the money you borrowed.
People borrow money for all sorts of reasons, including to buy services and goods such as cars, household appliances, furniture and stereos.
Is there a limit on the interest rate?
The law doesn’t limit the rate of interest lenders can charge you. However, it does set out how lenders must calculate interest, and this must be explained in your contract. It pays to check the rates of a number of lenders before signing a contract.
Credit sales
A credit sale is where you buy goods on credit. You’re allowed to take the goods and use them while paying the money back (this type of credit used to be called hire purchase). You don’t own the goods until you have paid the credit off in full.
A credit sale is different from a lay-by sale. With lay-by the goods stay with the seller until you’ve made the fi nal payment.
Credit sale contractsUsually you will enter a credit sale contract with a seller, but the seller is likely to have an arrangement with a lender (fi nance company) for the credit. The seller will either be acting as an agent for the lender or transfer your contract to the lender. See ‘What’s in a contract’ on page 8 for more detail on what this contract must include.
Loans
When you borrow money as a loan, you and the lender enter a credit contract. The loan will be one of two types:
• A secured loan, where the lender asks you to list goods you own (such as a car) as ‘security’ for the loan. This means the lender can seize and sell the goods if you don’t repay the money
or• An unsecured loan, where you don’t have to provide the lender with a list of your goods
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If you’re asked to provide security, don’t list goods that are worth more than the loan, as the lender can seize your security if you don’t keep up your payments.
For example, if you list your house as security when buying a car and then fail to make payments, you could end up losing the house to pay off the car.
You can’t list goods that: • don’t belong to you • you’re still paying off under a credit sale agreement• you’re already using as security for other loans.
Check out deals with other sellers and lenders
For goods…It pays to check out the cost of credit deals in several stores before making your purchase – it may be cheaper to take out a bank loan. If you don’t need the goods right away, ask the seller if lay-by is available. This may be a cheaper option as it won’t include credit costs such as interest charges.
For loans…Check with several banks or lenders before taking out your loan. Loans from smaller fi nance companies often cost more than loans from banks because of higher interest rates.
Who can get credit?
If you’re over 16 years old you can apply to borrow money or buy goods on credit as long as you meet the lender’s credit conditions. These are usually based on your ability to make the payments. Lenders may check your credit background to make sure you haven’t failed to meet credit payments in the past.
The lender may ask you to provide a co-borrower or guarantor if, for example, you’re under 18 guarantor if, for example, you’re under 18 guarantoryears old or have a poor credit history.
What is a guarantor?
A guarantor is someone – often a friend or family member – who takes responsibility for your debt if you don’t keep up the payments.
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Guarantor rights
The guarantor has to enter a contract with the lender promising to take on this responsibility. The contract will state:
• the amount the guarantor is guaranteeing
• the circumstances where they will have to pay
• how long they’re responsible for guaranteeing the loan or credit sale.
The lender must keep the guarantor informed, in writing, of the conditions of the contract between the lender and the borrower. This includes:
• the original information about the contract including a ‘disclosure statement’ and terms and conditions
• any changes made to the contract while the goods or the loan are being paid off
• any action taken to repossess the goods.
The lender must keep the guarantor informed, in writing, of the conditions of the contract between the lender and the borrower....including a ‘disclosure statement’ and terms and conditions.
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What’s in a contract?
You enter into a credit contract when you:
• borrow money
• buy goods on credit (credit sales)
• get a bank overdraft
• use revolving credit – eg, a credit card.
The credit contract sets out in writing your rights and what the lender expects you to do. It tells you:
• what you’re buying, or the amount you’re borrowing
• how much it will cost to borrow, including fees, charges and interest
• how much and how many payments you have to make
• when and how you have to make these payments.
Why do I need to read my contract?
It’s very important that you read the contract before you sign it. Why? So that you know about your obligations and your rights. If you can’t understand it, show the contract to someone who can – a friend or a family member – or seek help from your local Citizens Advice Bureau or Budgeting Advisory Service (see ‘Getting outside help’ on page 21).
Who is the contract with?
With a loan, your contract is with the lender. When you buy goods on a credit sale, you’ll fi rst deal with a seller. This is because most sellers have agreements with lenders (fi nance companies) who provide the credit. So, while you buy the goods from the seller, you make your credit sale contract payments directly to the lender. Your contract should tell you who the lender is.
Sometimes the seller may be required to seek credit approval from the lender before fi nalising your credit contract. In a credit sale, don’t take the goods home until approval has been given and you’ve signed the contract.
Making wise choices
Before you enter a credit contract, ask yourself:
• can I afford the payments?• what are the extra charges I have to pay, and am I prepared to pay them?• will I be able to keep paying the instalments for the length of the contract? 8
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A closer look at contracts
The information provided to you under your credit contract must be in writing. It will be in the form of a ‘disclosure statement’ and other terms and conditions.
The lender must include information that is necessary for you to understand your rights and obligations. If any of the information listed below is missing from your disclosure statement, you may not have to pay all the costs of credit, such as fees and charges set out in your contract.
The contract must include information:
About the lender
• their name and payment address details.
About how much you are borrowing
• the amount borrowed or the price of the goods (for credit sales)
• the total amount owed
• the number of payments
• the amount of each payment
• when each payment has to be paid.
About how much the credit is costing you
• the total amount of interest to be paid
• the interest rate and how it’s charged
• the length of the interest-free term, if any
• booking or establishment fees
• insurance fees – this could be to cover the goods in case of damage or to cover your ability to keep making payments
• all other fees, such as a credit check or security valuation fee.
Are there limits on credit fees?
All credit contract fees have to be reasonable and must be based on the lender’s costs of providing the contract.
About other conditions
• information about the goods you have listed as security for the loan (for credit sales the security is over the goods you’re buying)
• fees the lender may charge if you don’t keep up payments (these are called default fees)
• charges you may have to pay if you pay the goods or loan off early
• how often the lender will send you statements.
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About your rights
• when and how you can cancel the contract
• any refund for paying the goods or loan off early.
How will I receive the disclosure statement?
The lender must give or send you this information in written form. The statement can follow a format set out in the Credit Contracts and Consumer Finance Regulations. The statement is part of your contract.
When should I receive my disclosure statement?
The lender should give or send you a copy of the disclosure statement and any other terms and conditions either before the contract is made or within fi ve working days afterwards. See ‘Problems with credit’ on page 13 for information on what you can do if you don’t receive the disclosure statement and other documents.
Your checklist
Use these questions as a checklist before you sign a credit contract…
Do I know…
• what I will pay in total for this credit?
• who I have to pay and when I have to pay them?
• how many payments I will have to make?
• how much each payment will be?
• if I have to pay any other fees?
• what my rights are to cancel the contract or to repay early?
• whether the lender has security over the goods (for credit sales)?
Other things you might want to check:
• do the fi gures add up?
• do I need insurance for the goods or to cover my payments?
• are the goods correctly described (for credit sales)?
• is the lender’s request for security reasonable?
• do I need advice from a budget advisor or legal expert (see ‘Getting outside help’ on page 21).
Think twice before you sign
Don’t sign a credit contract if you’re not sure. Ask for a copy, take it home to read, get advice and compare the costs with those of other sellers or lenders.
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Carefully check the terms set out in your contract (the ‘fi ne print’), as these tell you what you’re required to do. Once you sign a contract, in law, you’ve agreed to it even if you haven’t read it.
The types of obligations the lender might require of you are:
About you
• you have to tell the lender, in writing, if you change address.
About payments
• you must keep up the payments. If you fall behind you may have to pay:
- default interest (usually higher than the contract rate)
- costs for sending out reminder notices (some companies charge $15 per notice)
- charges for having goods returned to you if they are repossessed.
About the goods – for credit sales contracts
• you must keep the goods insured
• you must keep them in good working order
• you must keep the goods in your control – eg, you can’t lend a stereo you’ve bought on credit to someone else to keep in their home
• if you’re buying a car, make sure an unlicensed driver doesn’t drive it.
Cancelling the contract
Cancelling a credit sale contract
If you haven’t received the goods yet, you have three working days (from the day after you receive your disclosure statement) to tell the lender in writing that you want to cancel the whole deal. If you want to make sure the letter gets there on time, deliver it to the lender yourself or send it by registered mail.
If you’ve already taken the goods home, you have three working days (from the day after you receive your disclosure statement) to write to the lender to cancel the credit part of the contract. You’ll still have to pay for the goods, as you can’t cancel the sale part of the agreement. After writing to cancel, you have 15 working days to come up with the cash price of the goods.
You can also cancel the credit part of the contract if the lender fails to send you a copy of the disclosure statement and other terms and conditions. Again, you’ll still have to pay for the goods.
If you bought the goods from a door-to-door salespersonThe Door to Door Sales Act 1967 provides a different, seven-day right of cancellation. seven-day right of cancellation. seven-dayIf you bought your goods in a credit sale from a door-to-door seller, see our factsheet ‘Door to Door Sales Act’.
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Cancelling a loan contract
You have three working days to tell the lender in writing that you don’t want the loan (from the day after you receive your disclosure statement). You must give back the loan money and pay any costs.
You can also cancel the loan if the lender fails to send you a copy of the disclosure statement and other terms and conditions.
You can’t cancel a contract…
…if the loan or credit sale has a term of less than two months and you haven’t used any of the credit to pay the seller.
Is today a working day?
The three working days start from the day after you receive the disclosure statement. day after you receive the disclosure statement. day afterSaturdays, Sundays and public holidays are not working days.
Repaying early
You can pay off the full amount owing on your credit sale or loan contract at any time. A full prepayment is where you pay in full the total unpaid balance of your contract before it’s due.
Some contracts may allow you to pay off some of the balance on your credit sale or loan contract early. This is called part prepayment.
If you make a prepayment, the lender may charge you a fee to cover their costs. These costs must be reasonable. You can ask the lender what costs you’ll have to pay if you repay your credit sale or loan contract early. They’re required to give you this information if you ask.
Refunds on insurance charges or premiums
The lender may have to refund any insurance premium you’ve paid. The amount you receive will be based on how early you’re repaying the balance – the later you repay, the smaller the refund.
Are there benefi ts in repaying early?
Before making a prepayment, check that it is worth your while. Compare the cost of repaying early with what you’ll save on interest, insurance and other costs.
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You didn’t get a copy of the contract documents
If you don’t receive a copy of the disclosure statement and other contract terms either before the contract is made or within fi ve working days from the date the contract was made, the lender can’t force you to meet the contract’s conditions and you may not have to pay all the credit charges (for example, interest and fees). The same goes if the contract doesn’t include all the information set out in ‘What’s in a contract?’ on page 8.
What do I do?
First ask the lender for a copy of the disclosure statement and other contract terms.
If they still don’t give you this information, you can make a claim with the Disputes Tribunal or the Courts (see ‘Getting outside help’ on page 21). You can claim a refund of any credit charges you’ve paid the lender while you haven’t had this information.
Goods bought under a credit sale are faulty
The Consumer Guarantees Act 1993 says that goods you buy from a seller must be of an acceptable quality and match their description. They must also be able to do what they’re supposed to.
What do I do?
Contact the seller (not the lender). If the goods are faulty, the seller must put this right by providing you with a ‘remedy’ – eg, repair, replacement or a refund depending on how serious the problem is.
For more information on your rights when goods are faulty, see our pamphlet ‘The Consumer Guarantees Act – Goods’.
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Don’t stop payments when goods are faulty
If you’re having a dispute over faulty goods on credit sale, don’t stop your payments. Your dispute with the seller over the goods is separate from your agreement with the lender. If you stop your payments, you could end up paying penalty interest, or worse, the goods could be repossessed. Tell the lender you have a problem with the goods.
Goods bought under a credit sale are lost, stolen or damaged
It’s your responsibility to look after the goods while you’re paying them off. While not required by law, many lenders will insist you insure the goods. Your existing household insurance may be acceptable cover.
Insurance requirements
The contract should explain any insurance requirements, including how much of the premium you’ll get back if you make a full prepayment early. See ‘Repaying early’ on page 12.
Lenders can’t make unreasonable insurance requirements. However, they may insist you have some insurance before agreeing to provide you with credit. This may include insurance for:
• loss or damage of the goods (your household contents insurance policy may be enough)• yourself to cover your ability to keep up payments.
What do I do?
• If you’ve taken out insurance, check your policy or check with the insurance company to see how to make a claim. The money the insurance company pays out should cover your debt to the lender.
• If you haven’t insured the goods and they are lost, stolen or damaged, you’ll have to keep paying for them.
You can’t keep up payments
Contact the lender as soon as you realise you can’t afford the payments. They may agree to one of the three options below. If you don’t contact them, you might be charged penalty interest and the goods or security could be repossessed – at this point you’ll also have to pay repossession fees.
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What do I do?
Contact the lender and ask them if you can apply for one of these options:
1. Spread the payments over a longer period
While you’ll pay less for each monthly payment, you’ll pay more over the term of the contract because you’re borrowing over a longer period. Any changes to payments must be agreed, in writing, by you and the lender. A written copy of the new arrangement must be sent to you before the changes can take effect.
2. Apply for hardship
If you can show you’ve experienced unforeseen hardship, you can ask the lender to change the terms of your credit contract. ‘Hardship’ may cover illness or injury, losing your job or ending a relationship. You can only apply for this if you couldn’t have ‘foreseen’ the hardship when you entered the contract – eg, you had an accident six months after you took out the loan and because of the accident you had to stop working. You also need to be up to date with your payments and within your credit limit – eg, for credit card contracts – when you apply for a change to your contract because of hardship.
What changes can you apply for?• To spread the payments over a longer term, which reduces the amount of each payment.
• To postpone payment dates. or• A combination of these two options.
3. Ask the lender to take the goods back
The lender can choose whether or not they take the goods back. This is called ‘voluntary repossession’. If they agree to take back the goods, the lender might get a price for the goods less than the total amount you still owe. You’ll be required to pay off any remaining amount.
If the lender takes the goods back, they can’t charge you repossession fees unless you’ve asked them to pick up the goods. However, they can charge you for the costs of preparing the goods for resale.
Need help budgeting?
If you’re struggling to meet your loan payments, you may like to visit a Budgeting Advisory Service. They can help by preparing a budget, which may make it easier for you to meet your payments before the need to take other action. You can fi nd your local service by looking under Budget Advice Services in the White Pages.
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Maybe the amount of some fees or the contract’s insurance or other requirements are ‘oppressive’. ‘Oppressive’ means that the contract conditions are harsh or unreasonable. If you think your contract terms are oppressive, you can take a claim against the lender to the Disputes Tribunal or Court.
If it decides the terms are oppressive, the Tribunal or Court can require the lender to change the credit terms of a contract. For example, a contract that requires you to make payments in person, in cash and only on a Friday before noon, with no other payment options, could be considered unreasonable.
What do I do?
First, contact the lender and ask them to consider changing the terms you think are harsh or oppressive.
If the lender doesn’t agree, you can take a claim to the Disputes Tribunal. See ‘Getting outside help’ on page 21 for more information.
Your goods are to be repossessed
If you don’t keep up the payments or you break other contract requirements – eg, you have a car on credit sale and you let an unlicensed driver drive it – then the lender can repossess the goods you’ve bought by credit sale or offered as security for your loan. The right to repossess the goods or security must be included as a term of your credit contract.
What do I do?
Read the six steps of repossession on the next page. These rules cover your rights and options, and must be followed by lenders repossessing goods. They are set out in the Credit (Repossession) Act 1997.
Who do I deal with?
While in most cases you’ll deal with the lender, the lender may give the contract back to the seller if your payments are behind. In these cases the lender may send you the pre-possession notice but the seller sends the repossession agent and you deal with the seller.
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t The six steps of repossession
1. The lender sends a pre-possession notice
The lender must send you a notice before they repossess the goods. This ‘pre-possession notice’ must tell you:
• the amount you owe (the arrears)
• that you have 15 days from the day the notice was sent to pay the arrears.
This is sent to your last known address. If you’ve moved house and haven’t told the lender, in writing, of your new address, you may not receive this notice. The lender will have met their obligations if they sent the notice to your last known address. Your obligation is to keep them informed of your current address.
Lenders don’t always have to give notice
If the lender has good reason to believe the goods are at risk – eg, you’ve advertised them for sale – they don’t have to send you a notice or wait 15 days before repossessing the goods.
What notice do guarantors get?
If you’re a guarantor, the lender must send you the same pre-possession and post-possession notices that are sent to the borrower. This is because under your guarantor agreement, you’ll have to pay any money the borrower can’t or won’t pay.
The notices are sent to your last known address, so if you’re moving house remember to write to the lender and let them know. This way you’ll have some warning if payments aren’t being made by the borrower.
The lender doesn’t have to send you a notice when the goods are sold.
2. The lender repossesses the goods
If you don’t pay the amount owing within the 15 days, the lender can repossess the goods. Lenders often use repossession agents for this.
If you’re at home…When the agent comes, they must give you:
• a copy of the pre-possession notice
• written proof that they’re working for the lender.
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You must not stop the agent from entering your house but you can pay them the arrears to stop them taking the goods. Even if the goods aren’t taken, you may have to pay the lender’s costs for using a repossession agent.
The agent doesn’t have to accept a cheque. They may allow you time to get to a bank or money machine.
Who can’t be a repossession agent?
People can’t be repossession agents if they have been:
• convicted of a crime of violence or dishonesty, such as theft, within the past fi ve years• sentenced to 10 years in prison• released from prison within the last year.
If you’re not at home…The agent is allowed to enter your house and take the goods. But they must leave:
• a notice to say they’ve entered the house
• a list of the goods they’ve taken
• a copy of the pre-possession notice
• written proof that they’re working for the lender.
They can only take the goods listed on the credit contract and they must enter your house in a reasonable way. If necessary, they’re allowed to break in, but they must do as little damage as possible and they should not leave your house obviously open. The agent may have to meet your costs of repairing unnecessary damage.
When can repossession agents visit?Agents can only enter your property between 6am and 9pm Monday to Saturday. They can’t come on Sundays or public holidays unless, after missing payments, you’ve signed an agreement to allow agents to come at these times as well.
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Do I have to pay repossession costs?
Yes. You agreed to pay these costs when you signed the contract. If you think the costs are unreasonable:
• ask the lender to explain the charges• check out how much other places charge• go to the Disputes Tribunal (see ‘Getting outside help’ on page 21).
3. The lender sends a post-possession notice
The lender must send you a post-possession notice within 21 days of the goods being taken. This notice must tell you:
• the date they took the goods
• the lender’s repossession costs
• what you need to do if you want to ‘reinstate’ or ‘settle the agreement’. To reinstate you’ll have to pay whatever is needed to get the contract back up to date before you can get the goods back and start paying for them again. Settling the agreement means paying the full amount owing on the credit sale.
• the lender’s estimate of the current value of the goods – usually this is not the same as what you paid for them
• what will happen if you don’t pay.
The lender doesn’t have to send you this notice if:
• they value the goods at less than 80 percent of the cash price
• you choose to return the goods voluntarily.
4. You decide your response
You now have 15 days before the goods are sold. Your options are to:
• pay the default amount and repossession costs
• pay the total amount owing
• fi nd someone who’ll buy the goods for the current value
• do nothing.
In deciding what to do, ask yourself:
• do I really need the goods?
• how much of the contract have I paid off already?
• would I be worse off if I borrowed money to pay the default – eg, will I pay a higher interest rate than on the original credit sale?
Checking out ‘You can’t keep up payments’ on page 14 may help you to decide.
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5. The lender sells the repossessed goods
If you decide to do nothing, the lender can sell your goods privately, at auction or by tender. If by auction or tender, they must tell you the time and place of the auction or the details of the tender. Both you and the lender have the right to bid for the goods.
The sale must be commercially reasonable and the lender must make a reasonable effort to get a good price – that is, they can’t sell the goods to a mate for a cheap price. If the goods are reasonably valuable, say a car, you may want to get your own valuation done before they are sold. You have to pay for this.
If the goods don’t sell……within three months, you can write to the lender to tell them to put the goods up for auction.
6. The lender sends a statement of account
Within 10 days of selling the goods, the lender must send you a statement of account, showing:
• how much the goods sold for
• the cost of the sale – eg, advertising, auctioneer’s fees
• how much you owed before the goods sold (the amount required to settle the agreement)
• how much you still owe, or, if the goods were sold for more than you owe, how much you’ll get back. (It’s most likely you’ll owe money to the lender.)
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The sale of repossessed goods must be commercially reasonable and the lender must make a reasonable effort to get a good price – that is, they can’t sell the goods to a mate for a cheap price.
How
to d
eal w
ith a
pro
blem
How to deal with a problem
You can take these steps to try to solve a problem.
1. Ask for the problem to be put right
Go to the seller or lender and ask for the problem to be put right. Keep a note of:
• when you talked to someone
• who you talked to
• what they said.
If you write to them, keep a copy of your letter. For more information about making a complaint, see our factsheet ‘Making a Customer Complaint’.
2. Get advice
If this doesn’t fi x the problem, ask for advice from your nearest Citizens Advice Bureau – phone 0800 FOR CAB (0800 367 222).
If you visit a Citizens Advice Bureau or any other person for guidance, make sure you have your contract and any letters or notices from the lender or the seller. If the dispute is about how much you owe, get a printout of your balance and payments from the lender and take any receipts or bank statements that prove how much you’ve paid.
3. Try again
Once you know more about your rights, write or talk to the seller or lender again and ask for the problem to be put right. Keep a record of who you spoke to and when, and copies of any letters you send.
If you still can’t sort out the problem directly, you can seek help from a number of agencies (see below).
Getting outside help
If you fi nd you can’t solve the problem yourself, or don’t know how, a number of places can offer you help.
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How
to d
eal w
ith a
pro
blem
Community agencies
As well as the Citizens Advice Bureau, you can get advice on credit sale and loan contracts from Budgeting Advisory Services and Community Law Centres. These are listed in the White Pages of your local phone book.
Taking a claim to the Disputes Tribunal or Court
The Disputes Tribunal or Court have the power to change or remove contract terms and can order sellers or lenders to return your goods if they’ve been illegally repossessed. They can award damages to you if the lender or seller has not provided all the required information.
You can take a claim to the Disputes Tribunal if the amount of your credit contract is under $7500 (although if you and the seller or lender agree, this can be up to $12,000). Tribunal addresses and phone numbers are listed under ‘Justice Ministry of’ in the Blue Pages of the phone book. For more information about making a claim in the Disputes Tribunal, see our factsheet ‘The Disputes Tribunal’ or contact your nearest Citizens Advice Bureau, Community Law Centre or District Court.
It costs between $30 and $100 to make a claim to the Tribunal depending on the amount of your claim.
If your credit contract is for more than $7500 you may need to see a lawyer about whether you can take your claim to the District Court.
Reporting sellers and lenders
You can report sellers or lenders who’ve breached the rules of the Credit Contracts and Consumer Finance Act to the Commerce Commission. The Commission enforces the Act.
Note
The Commerce Commission will not take your personal action against a seller or lender to Court. You can take your own case for damages against a seller or lender through the Disputes Tribunal or the District Court.
The Commission is interested in all breaches of the Act, but may only investigate certain reports that meet set criteria.
The Commerce Commission can:
• prosecute traders or lenders – they can be fi ned up to $30,000 for each breach of the Credit Contracts and Consumer Finance Act
• ask the Court to ban a person who is found guilty of breaching the Credit Contracts and Consumer Finance Act from providing credit or being a director or employee of an organisation providing credit.
You can phone the Commission’s enquiry line on 0800 943 600 or write to PO Box 2351, Wellington or email [email protected].
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Other helpful information
See these Ministry of Consumer Affairs publications:
Being a Guarantor
The Consumer Guarantees Act – Goods
The Door to Door Sales Act
The Disputes Tribunal
The Fair Trading Act
Making a Customer Complaint
Or check out our website: www.consumeraffairs.govt.nz.
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Ministry of Consumer Affairs
PO Box 1473
Wellington
Phone 04 474 2750
Fax 04 473 9400
www.consumeraffairs.govt.nz
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ISBN 0-478-28426-8
March 2005
