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Credit Contracts and Consumer Finance Act 2003

Consumer credit contracts - Provisions relating to debtors under high-cost consumer credit contracts - Rules

45H: Rate cap

You could also call this:

"Lenders can't charge more than 0.8% per day on high-cost loans."

Illustration for Credit Contracts and Consumer Finance Act 2003

You have a high-cost consumer credit contract when you borrow money. The lender can charge you a maximum of 0.8% per day. This is calculated as a proportion of the amount of credit provided. You cannot be charged more than this maximum rate. If a payment results in this rate being exceeded, section 48 also applies. A charge means the costs of borrowing, excluding default fees, as stated in section 45E. Credit provided means the unpaid balance, excluding any amount that the regulations state must be excluded.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS352922.

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Topics:
Money and consumer rights > Consumer protection
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Part 2Consumer credit contracts
Provisions relating to debtors under high-cost consumer credit contracts: Rules

45HRate cap

  1. The maximum rate of charge that is recoverable under a high-cost consumer credit contract is 0.8% per day, calculated in accordance with the regulations as a proportion of the amount of credit provided.

  2. A high-cost consumer credit contract must not provide for an amount to be recoverable that will result in that maximum rate being exceeded or that is capable of resulting in that maximum rate being exceeded.

  3. No person may be a creditor under a high-cost consumer credit contract that contravenes this section or accept a payment, or debit a fee or charge to the debtor’s account, in a way that results in that maximum rate being exceeded.

  4. Section 48 also applies if a payment results in that maximum rate being exceeded.

  5. In this section,—

    charge means the costs of borrowing within the meaning of section 45E, excluding default fees

      credit provided means the unpaid balance excluding any amount that the regulations state must be excluded.

      1. A contract or creditor does not contravene this section if the maximum rate is exceeded only because of a part prepayment or full prepayment.

      Notes
      • Section 45H: inserted, on , by section 25 of the Credit Contracts Legislation Amendment Act 2019 (2019 No 81).