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Credit Contracts and Consumer Finance Act 2003

Consumer credit contracts - Required disclosure - Request and guarantee disclosure

26: Disclosure of changes to guarantors

You could also call this:

"Lenders must tell guarantors about changes to a loan within five working days."

Illustration for Credit Contracts and Consumer Finance Act 2003

If you guarantee a loan, the lender must tell you about changes to the loan. You need to know about changes that increase what the borrower owes or reduce the time to pay. The lender must tell you within five working days of the change. The lender must give you full details of the change. They may also need to give you other information, as set out in regulations. In some cases, the lender can tell you about changes in a different way, as set out in regulations, instead of following the usual rules, such as those in section 35. The lender does not have to tell you about changes if they cannot find you. However, if the loan has very high interest rates or fees, the lender cannot use the simpler method of telling you about changes, even if they have followed the regulations.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM212769.

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Topics:
Money and consumer rights > Consumer protectionMoney and consumer rights > Banking and loans
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"What you need to know when guaranteeing a loan"

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Part 2Consumer credit contracts
Required disclosure: Request and guarantee disclosure

26Disclosure of changes to guarantors

  1. Every creditor who takes a guarantee of a consumer credit contract must ensure that disclosure of the information set out in subsection (2) is made to every guarantor under the guarantee if—

  2. the debtor and the creditor agree to a change to the contract that increases the obligations that the debtor would otherwise have or reduces the time for payment of any payment to be made under the contract; or
    1. the creditor exercises a power under the contract that has the effect of increasing the obligations that the debtor would otherwise have or reducing the time for payment of any payment to be made under the contract.

      1. The information that must be disclosed under subsection (1) is as follows:

      2. full particulars of the change:
        1. any other information prescribed by regulations to be information that must be disclosed under subsection (1).

          1. Disclosure under subsection (1) must be made within 5 working days of the day on which—

          2. the change is agreed to by the debtor and the creditor, in the case of subsection (1)(a); or
            1. the change takes effect, in the case of subsection (1)(b).

              1. If the creditor has exercised a power under the credit contract to change the amount of an interest rate or to change the amount of any fee or charge payable, the creditor may, instead of complying with section 35, make disclosure in accordance with any publication requirements prescribed by regulations for the purposes of this section.

              2. Disclosure under this section is not required in relation to a particular guarantor if the creditor cannot reasonably locate the guarantor.

              3. Subsection (4) does not apply to a high-cost consumer credit contract.

              Notes
              • Section 26(5): inserted, on , by section 18(1) of the Credit Contracts Legislation Amendment Act 2019 (2019 No 81).
              • Section 26(6): inserted, on , by section 18(2) of the Credit Contracts Legislation Amendment Act 2019 (2019 No 81).