If you have a mortgage, personal loan, overdraft or use a credit card then you are using credit.
A person has been given credit if they have been given the right to:
put off paying an existing debt
incur a debt and put off paying it
purchase goods or services and put off paying for them – this is typically known as a credit sale as the borrower usually gets the goods or services before paying for them in full and pays them off over time.
By law any borrower who is given credit has entered into a credit contract and has specific rights and obligations.
What is a consumer credit contract?
A consumer credit contract is a type of credit contract where the borrower:
is a private individual (in other words, they are not a company or incorporated society)
is entering the contract primarily for personal, domestic or household purposes (as opposed to primarily for business or investment purposes)
may have to pay interest or a credit fee, or provide a security interest.
In addition, the lender must either:
be in the business of providing credit (such as a finance company or bank) – although lending does not have to be their only business or main business
be in the practice of providing credit as part of their business (such as a car dealer)
make a practice of entering into credit contracts on behalf of someone else, or
have been introduced to the borrower through a paid advisor or broker.