A recent survey has revealed only a fifth of people know their legal rights when shopping around for a loan.
Almost half of respondents to the 2020 New Zealand Consumer Survey took out a loan, bank overdraft, or other hire purchase agreement to pay something off in the past two years.
According to the Credit Contracts and Consumer Finance Act 2003 ( CCCFA ), if a person takes out a loan and finds a better deal within five working days, they can cancel the original loan.
Ministry of Business, Innovation and Employment (MBIE) national manager of consumer protection, Mark Hollingsworth, says some knowledge of the CCCFA is vital to ensure people understand their rights when they borrow money or buy something on credit.
“This week is Money Week so it’s a timely reminder for people to brush up on what they can and can’t do. The findings of our survey offer us a chance to target information to consumers to help them avoid problem debt,” Hollingsworth said.
The 2020 New Zealand Consumer Survey (NZCS) also showed about one in three people had not even heard of the CCCFA, with six per cent also unaware of both the Consumer Guarantees Act 1993 and the Fair Trading Act 1986.
The survey found those most likely to have never heard of the CCCFA are families (45 per cent), those aged 18-26 (43 per cent) or 27-36 (36 per cent); women (32 per cent); and people living in Auckland (35 per cent).
Pacific consumers, at 57 per cent, were most likely to have entered into a credit contract, along with those with an annual household income over $100,000 (53 per cent). Those aged 27-46 years (55 per cent), Māori consumers (54 per cent), and those in paid employment (51 per cent) were also more likely to have taken on a loan.
“In today’s increasingly dynamic and evolving consumer finance and credit marketplace, and given the steady rate and diverse range of people entering into credit contracts, it’s important people have a robust knowledge of the CCCFA and are fully equipped to transact with confidence,” Hollingsworth said.
“Our research helps enable us to report on emerging trends, so we can identify key population groups who most need advice and guidance, and ensure interventions are targeted to where they’re needed most.”
The Consumer Protection website offers a range of resources and information to help consumers understand their rights, including the “ Shopping for a loan” fact sheet.