Borrowing money or buying goods on credit: Know your rights and obligations

If you borrow money or buy goods on credit you need to know about the Credit Contracts and Consumer Finance Act.

This information relates to contracts entered into before 6 June 2015. For contracts entered into on or after this date, see the relevant guidance.

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What’s the Credit Contracts and Consumer Finance Act?

The Credit Contracts and Consumer Finance Act (CCCF Act) is a law that helps protect you when you’re borrowing money. It helps you understand what you’re agreeing to, provides useful information to help you shop around for the best deal and allows you to keep track of your debts.

If you have a mortgage, use a credit or store card, have a personal or cash loan or an arranged overdraft, or buy goods or services on credit, you’ve probably entered a consumer credit contract. This means you have rights under the CCCF Act.

What do I need to know?

Before you borrow money or buy goods on credit, you need to understand what you’re getting into. What’s it going to cost you? What repayments will you need to make? What interest or fees will you have to pay?

A lender must give you this information – it’s called disclosure. Read the contract and if you don’t understand something, don’t sign – go and get some independent advice.

Your lender must also give you information to help you keep track of any debt while you’re paying it off.

Read more in our fact sheets on disclosure.

What extra costs will I have to pay?

A lender will usually add interest and fees to the amount you have borrowed. These must be set out in your disclosure.

Interest is what a lender charges you for having the use of their money. There are rules about how a lender charges interest. A lender may also charge fees for setting up the contract and managing it. Any fees must be reasonable and based on the lender’s costs.

If you think the interest and fees are too high, don’t sign the contract – ask to take the contract away and get some independent advice.

Read more in our fact sheets on interest charges and fees.

Can I get out of a contract?

Before you sign, you need to think very carefully about what you’re agreeing to and whether you can afford it. By signing a contract, you are agreeing to its terms and to meet your end of the deal.

If you change your mind and want to cancel the contract, you only have a very short time to cancel after signing up and you may still have to pay fees.

You can end a contract at any time by repaying what you owe, but you may have to pay extra fees if you pay it back earlier than originally agreed.

Read more in our fact sheet on cancellation.

Do I need to get insurance?

Often a lender will suggest you buy insurance to cover your ability to repay a loan or to cover the goods you‘re buying. Your lender can’t force you to buy insurance that you don’t need. But it may be OK for a lender to insist you get insurance if you don’t already have it. If you think this makes the overall deal too expensive, shop around.

Read more in our fact sheet on credit-related insurance, extended warranties and repayment waivers.

What happens if I miss a repayment?

If you break the terms of your contract – for example, if you miss a repayment or go over your credit limit – you will probably have to pay a late fee or default interest.

Your lender may have security over something you own, which means that they can seize and sell this if you break the terms of your contract. For example, if your lender has security over your car and you miss repayments on your loan, your lender could seize your car and then sell it if you don’t catch up on the missed repayments.

  • Late fees, default interest and any security interest must be set out in your contract, so check before you sign.

Read more in our fact sheets on fees and interest charges.

What can I do if I’m struggling?

If you’re struggling to manage your debts, talk to your lender or a budget adviser (who can talk to your lender for you) as soon as possible, ideally before you get behind on your repayments.

If you suffer hardship, such as losing your job, falling ill, or losing a partner, ask your lender if they will change your contract to help you manage your debt better. Your lender doesn’t have to change your contract, but they may agree to extend the term of your loan, change your repayments, or allow you to delay your mortgage repayments. Remember, though, that this is likely to increase the total amount you are going to have to pay on your loan.

Read more in our fact sheet on hardship.

Can I switch lenders?

Yes. You can shop around for a better deal even when you have an existing contract, but work out what it will cost to switch. Your lender may charge a fee if you pay back your contract early, and your new lender may charge for setting up a new contract.

Read more in our fact sheets on the CCCF Act.

Got a problem?

If you’ve got a problem with a consumer credit contract, there are a number of things you can do:

Get some advice

You can contact your local Citizens Advice Bureau or 0800 367 222, Community Law Centre, or Budget Advice Services 0508 283 438.

Report it to the Commerce Commission

We’re responsible for enforcing the CCCF Act. You can call us on 0800 94 3600 or use our complaint form. We have a telephone interpreting service available through Language Line if you speak little or no English.

Report it to the lender’s dispute resolution scheme

All lenders must be members of an independent dispute resolution scheme. To find out which scheme a lender belongs to, go to

Take action

You can take your own action against a lender under the CCCF Act through the Disputes Tribunal. Go to for further information.

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