More knowledge needed when loan shopping – survey
If you take out a loan and find a better deal within five working days, you can cancel your original loan, yet a recent consumer survey shows only one in five people know this.
Almost half of respondents to the 2020 New Zealand Consumer Survey took out a loan, bank overdraft, or other hire purchase agreement in the past two years.
Ministry of Business, Innovation and Employment consumer protection national manager Mark Hollingsworth says some knowledge of the Credit Contracts and Consumer Finance Act is vital, to ensure people understand their rights when they borrow money or buy something on credit.
The Credit Contracts and Consumer Finance Act ensures people are able to make informed choices, know what they're agreeing to, and can keep track of their debts. The CCCFA requires lenders to act responsibly at all times.
“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,” says Mark.
The survey also shows about one in three people had not even heard of the CCCFA, with five per cent also unaware of the Consumer Guarantees Act and six per cent unaware of the Fair Trading Act.
People most likely to have never heard of the CCCFA are families at 45 per cent, those aged 18-26 (43 percent) or 27-36 years (36 per cent); women (32 per cent); and people living in Auckland at 35 per cent.
Those most likely to have entered into a credit contract include people aged 27-46 years at 55 per cent, Pacific consumers at 57 per cent and those with an annual household income over $100,000 at 53per cent. Around 54 per cent of Māori consumers and 51 per cent those in paid employment have also entered into a credit contract.
“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,” says Mark.
“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, available here.