Credit is not always the easy option

ANDREJA PHILLIPS COMMUNITY LAW MARLBOROUGH CASE WORKER
Last updated 16:00 31/10/2012

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In this first of three article series we look at living with credit.

We all know the feeling of wanting or needing something.

Borrowing money - whether it be by way of a personal loan, hire-purchase or another form of credit - often looks like a fast and easy way to get the coveted goods. But is it really?

Getting the money or the goods is really the easy part, everything else may well turn into a complex and regrettable experience.

The first unpleasant thing about getting something on credit is signing a wordy contract, often consisting of many pages of very fine print, with lots of words that are difficult to understand for most people.

"What am I really signing?" you may be thinking.

Then, the long-term nature of the agreement - people find themselves caught in the credit contract for many months or years - often after the money has been spent or the goods have perished, disappeared or are superfluous.

"How come I am still paying for this all these years later?"

Before entering into an agreement you should check all the potential fees. Remember also, that you will have to pay penalty interest if you are unable to meet your loan repayments.

It certainly does pay to think these scenarios through before committing to a loan or credit of any kind.

While Community Law Marlborough can assist with reading and understanding the contract, we cannot undo your contract's conditions once you have signed it.

The next problem might be that you change your mind after you have signed the contract.

"How can I get out of this?"

Credit cancellations are not always possible. So when can you, and can't you cancel a credit contract?

Part two of the Credit Contracts and Consumer Finance Act 2003 covers the law around credit contracts. Sub-part three covers the debtor's right to cancel.

Section 27, "Right to cancel consumer credit contract" specifies that the contract has to be cancelled within three working days and the cancellation must be in writing.

But it really depends on the type of contract you enter into.

As soon as you take possession of goods you will probably not be able to cancel the contract. If you buy goods at auction, or if the contract is for a duration of less than two months cancellation will not be possible either.

If and how you can cancel the contract should be contained in the agreement, so make sure to read and understand the implications before signing. It may be possible to terminate a contract early by way of full repayment - section 50 of the Act - or to apply for changes to contract conditions due to "unforeseen hardship" - section 56 of the Act.

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We can check that proper processes were followed. We can also take a look at your contract and statements to make sure all the fees you are charged are legitimate.

We will offer support if things go wrong or if there is a dispute about a debt.

But please - think things through or come to us with your questions before signing anything.

You may need a guarantor to be able to get the money or goods on credit. Please be aware that asking someone to be a guarantor is a huge responsibility for the guarantor.

They may well become liable for your debt.

Although your intentions may be pure and honest at the time you enter into the contract, you never know what could happen to you in the future - sickness, accident, job loss or a change of circumstances - your guarantor may just have to pay when things go wrong.

To anyone contemplating becoming a guarantor - please read all the fine print and consider very carefully.

Getting credit is not so easy after all is it? Please come and see us if you are unsure about anything.

Our legal information and assistance is free and confidential.

You will find us in central Blenheim, Level 3 of Porse House, 1-17 Market Street, opposite the Criterion Hotel.

You can phone 03 577 9919 or 0800 266 529

Email: reception@commlawmarlb.org.nz .

Our opening hours are Monday to Friday, 9am till 5pm - after 4pm by appointment only.

- The Marlborough Express

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