Tips for each stage of a loan

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A quick guide to borrowing money

Know what to expect from your lender at any stage of the borrowing process

When you need to borrow money to buy a house, buy a personal item like a car or TV, or sign up for a credit card or store card, it’s best to be prepared.

This guide provides information about what you can expect from your lender before you borrow money, during the borrowing process, and if you have trouble repaying it. It sets out things to be prepared for and tips to help you borrow money safely. It also provides links to more information including a list of places you can go to get help if you need it at any stage of the borrowing process.

Before choosing a loan

Do your research and shop around

You have a choice, so shop around. Whether online or in-store, lenders must make their interest rates, fees, and standard contract terms publicly available to help you make an informed decision.

When you are buying goods don't assume that you have to take a loan from the person you are buying from. For example, if you are buying a car, you don’t have to take out your loan at that car dealership. It might not be the best option

See ‘What do I need to know?’ in our "Borrowing money or buying goods on credit" fact sheet.

Make sure the loan is right for you

It’s important that your loan is affordable and suitable for your circumstances. Read the terms and conditions of the contract and ask questions.

Your lender will need to make reasonable enquiries to be satisfied it’s likely you can pay back your loan without facing substantial hardship and that the loan meets your requirements and objectives.

See ‘What you should expect from your lender’ in our "Borrowing money or buying goods on credit" fact sheet.

Read the key information provided by the lender

Your lender must give you key information about your loan including interest rates, fees, and any items included as security before you sign a contract – so there are no surprises. Make sure you read this information and understand what it means. If you have any questions about what it means ask your lender or get some independent advice.

See ‘What extra costs will I have to pay?’ in our "Borrowing money or buying goods on credit" fact sheet.

Read more about what you can expect from your lender.

After you get a loan

Act quickly if you change your mind

If you change your mind after signing up for a loan you may only have 5 working days to cancel so act quickly and make sure you write to the lender and tell them you want to cancel.

Keep in mind you may have to pay a cancellation fee. And, if you have bought goods on credit, you may not be able to return them.

See ‘Can I get out of a contract?’ in our "Borrowing money or buying goods on credit" fact sheet.

Stay informed

Make sure you know how much you have to pay and when.

Your lender must keep you informed of how your loan is progressing, generally by way of regular statements, at least every 6 months and every 45 days for revolving credit or by giving you on-line access to your account information.

See ‘What do I need to know?’ in our "Borrowing money or buying goods on credit" fact sheet.

What to do if you struggle with repayments

Speak to your lender as soon as possible

If something unexpected happens (eg, illness, relationship breakdown or loss of employment) which reasonably affects your ability to pay your loan, you may be able to make a hardship application. If granted, your lender can change the terms of the loan.

You can also seek budgeting advice from community agencies such as Citizen’s Advice Bureau or The National Building Financial Capability Charitable Trust.

See ‘What happens if I miss a repayment?’ in our "Borrowing money or buying goods on credit" fact sheet.

Read more about what to do if you are struggling with debt.

What to do if there is a problem with the loan

If there is a problem with your loan the first step is to speak to your lender. If you can not resolve the issue with your lender then contact your lender’s Dispute Resolution Service.

You can also make a complaint to us as we are responsible for enforcing consumer credit laws.

See ‘Got a problem?’ in our "Borrowing money or buying goods on credit" fact sheet.