- Your responsibilities if you provide credit
- Publication of standard form contract terms and cost of borrowing
Publication of standard form contract terms and cost of borrowing
If you lend to consumers or take security over consumer goods you must make your standard form contract terms and costs of borrowing for certain loans available publically.
- If you have a website, you must prominently and clearly display a copy of the standard form contract terms and costs of borrowing on that site.
- If you have business premises that are accessible to the public, you must prominently and clearly display on those premises a notice stating that a copy of the standard form contract terms and costs of borrowing is available on request (free of charge).
Standard form contract terms
- consumer credit contracts
- credit contracts secured over consumer goods (including security interests)
- buy-back transactions
- repayment waivers and extended warranties, when these are taken out in connection with the contract.
What are standard form contract terms?
- You might use a set of terms without amendment for every loan in a class of loans. A printed set of standard terms and conditions that are not open to negotiation will likely be standard form contract terms which must be published.
- You might use a set of standard terms as a starting point for negotiating loans with individual borrowers and some terms may be amended for each final loan agreement. The standard terms are likely to be standard form contract terms which must be published, even though some of the terms are amended to meet the needs for individual borrowers.
- You might also have a set of terms that you always include in a loan agreement even when the majority of other terms in the loan agreement are negotiated and drafted to meet the needs of individual borrowers. The set of non-negotiable terms are likely to be standard form contract terms which must be published. What matters is that you commonly use the terms, even if from time to time you agree to change the terms, or mix standard terms up with newly created terms.
Costs of borrowing
- consumer credit contracts
- credit contracts secured over consumer goods
What are costs of borrowing?
- all applicable credit fees
- all applicable default fees
- all interest charges, including annual rates of interest, and default interest charges.
Credit and default fees
- you must express annual interest rates as a percentage
- if there is more than one rate, you must describe how or when each rate applies
- if an annual interest rate is fixed for a period, the period during which the annual interest rate is fixed
- if an annual interest rate or default interest rate is variable or adjustable, a statement to that effect.
- be the rate or rates that are ordinarily available to borrowers under that class of credit contracts
- be the current annual interest rate or rates (if the rate is variable or adjustable)
- if the interest rate is expressed as a range, must be accompanied by a brief description of the factors that the lender may consider to determine the specific interest rate for particular classes of borrower (eg, “between 5 and 10%, depending on the borrower’s credit history”).