Dubbed the ‘The Triple CFA’ (Credit Contracts and Consumer Finance Act 2003), this is a set of laws that helps protect you when you want to borrow money.
It sets out rules that your lender must follow when you want to get a loan - the lender must make reasonable inquiries before the loan is granted so that they are satisfied that the loan suits your requirements and that you can repay it without suffering substantial hardship. Your loan must be written in simplified, jargon-free language that allows you to understand what you are agreeing to. This protects you, the customer, from predatory behaviour from lenders.
"This is a set of laws that helps protect you when you want to borrow money."
On 1 December 2021, new changes made to the CCCFA came into law. The intention of the changes is to ensure that consumers are able to make informed choices, know what they are agreeing to and can keep track of their debts, and the law emphasises the onus on lenders to ensure that loans 1) are suitable and affordable, 2) protect customers from taking on too much debt, and 3) protect customers from any hardship the loans could cause.
The Act provides protection on all credit contracts, for example:
- Personal loans and/or mortgages
- Users of credit cards
- Borrowing money on agreed overdraft
- Buying products and services on credit (eg. hire purchases)
The changes to the Act have significantly changed the lending landscape. Lenders need to take a more stringent stance when lending due to the Responsible Lending criteria set out in the Act, and this has led to financial institutions taking a ‘forensic’ approach to consumer lending - deep scrutiny into borrower affordability, and examining details around spending and income.
All of a sudden, your coffee and dining-out habits are being analysed under a microscope. Are they a sustainable habit that you can afford while you pay off a loan or is it a red flag that you can’t manage your money? How was making regular payments on expenses once a sign of responsibility, and now a sign of excessive spending? Or is this all just a misunderstanding?
Well, yes and no. When it comes to getting a loan, there are two areas that lenders need to investigate: affordability and suitability. In a nutshell; can you afford the loan, and is the loan ‘fit for purpose’ - does it suit your specific needs. So while it might seem that lenders are worried about that fourth latte of the week, it isn’t so much about what you’re spending your money on, but about the amount of discretionary income spent each week.
What does this mean for me?
Since the changes have come into effect there has been a significant delay in the processing of loan applications due to the added lending regulations, and a spike in declined applications as a result of the criteria. This often leaves Kiwis without the funds to purchase a vehicle, buy a home, renovate and other commitments that depend on financial assistance.
So, let's get down to it. What does this mean for you, what do you need to be aware of and how can MTF Finance help get you sorted? Keep scrolling to find out more.
We have the technology to organise your loan anywhere.
What do I need to know?
Taking out a loan isn't a decision that should be taken lightly, here are some points that you need to consider before you take out a loan. You should be fully aware of what you are getting into before you take out a loan, and the lender needs to give you all the information below as well as make sure you understand it. This is called disclosure. It includes:
- How much you'll have to pay back in total (including fees and interest)
- What regular repayments you need to make
- How often the repayments are (eg, weekly, monthly)
- The breakdown of the interest rate and fees payable
- How to cancel a loan
- What to do if you get into difficulty
The lender must tell you…
During the life of your loan, the lender must give you information about the loan so that you can keep track of the debt while you are paying it off. The lender must also publish the contract terms and cost of borrowing in a clear and prominent place on their website.
If their offices are in a public place, they also need to show a sign that says this information is available on request and free of charge.
You can ask for these forms at any time, and it is a good idea to get them so that you can compare your options.
Before you sign your loan, you need to know how much the fees are. The Credit and default fees need to be reasonable. The different types of fees you can expect to see are:
- Establishment fees
- Prepayment fees
- Default fees
If you see fees or charges named in the contract and don’t know what they mean, make sure to ask your lender.
"So, let's get down to it. What does this mean for you, what do you need to be aware of and how can MTF Finance help get you sorted?"
How can MTF Finance help?
This can all seem like a bit of a minefield to navigate by yourself. Happily, being a local (and responsible) lender means you can talk directly to us, making the process as simple as possible - so you can get a loan that’s right for you with minimum delay.
We’re happy to sit down and go through everything with you over coffee, but we’re also just as comfortable doing everything remotely via secured transaction, wherever you are. The important thing is, you’ll be talking directly to a local lending specialist who can help make the right decision for you.
We don’t think you should have to go through international call centres or someone based in a different location to get a vehicle loan. With MTF Finance, you can talk directly to a local lender who understands your needs, enabling you to borrow safely - and get on with your life!
As a nationwide company of responsible lenders, we’ve been helping Kiwis to do more since 1970. We’ve seen a lot of change, and we’ll see a lot more yet.
Our local lending experts are here to help
Who can apply?
If you’re a New Zealand resident over 18 years of age, have a valid New Zealand driver licence and a regular income, you can apply for finance with MTF Finance.
What do I need to apply?
To consider your application, you need to provide us with:
- A current New Zealand driver licence
- A recent bank statement less than 60 days old, in your name, showing transactions for 90 days
- A bank statement, utility or rates bill, New Zealand Government documentation or insurance confirmation showing your name and physical address
The good news? As long as your loan application is subjected to responsible lending criteria and checks, if you apply in person and bring these documents with you, we can usually give you an answer within an hour.
We will work with you to find the right loan to suit what you want to do, tailor the repayments to fit your lifestyle, structure them to suit - weekly, fortnightly or monthly, and find an interest rate unique to you.
Simple, local and trusted since 1970 - let MTF Finance help you get everything together.
Finance is subject to terms, conditions, lending criteria and responsible lending inquiries. See mtf.co.nz/terms for details.
We hope that's helped you understand how to navigate the changes and how you can still access the finance you need to get ahead. For any other questions about financing your next vehicle, or to start an application, give us a call - our team will be happy to talk you through it.
