Credit contracts

Legally mandated information and agreements in credit provision

The Consumer Credit (Western Australia) Code facilitates consumer access to important pre-contractual and contractual information by requiring credit providers to adhere to the following steps in a credit arrangement:

Give a "Pre-contractual Statement" and an "Information Statement" to the borrower before the contract is signed;
Sign the written contract and ensure that the borrower signs also;
Regularly provide regular account statements to the borrower; and
Abide by the terms set out in the Code in relation to changing the contract, advertising and enforcement proceedings.

The Pre-contractual Statement should include the following information:

the amount of credit that is to be provided;
the annual percentage rate or rates;
how the interest is calculated and when it is charged;
the total amount of interest if the contract is to be paid out within seven years;
the number, amount and frequency of repayments;
the credit fees and charges to be paid;
how you are to be informed about changes to the contract;
any default rate of interest and how this is calculated (eg. from a published reference rate);
the frequency of account statements;
details of relevant commission charges;
information about whether a mortgage or guarantee applies; and
details of credit-related insurance financed under the contract.

If you decide to approach more than one credit provider to see what sort of deal they will offer you for the credit you need, you can use the information in the Pre-contractual Statement to compare what is on offer.

The Information Statement outlines your rights and responsibilities as a borrower.

It is essential that you take the time to thoroughly read both of these statements before you sign the contract. If you have any queries about the information in either of these documents, you should contact the Consumer Credit Legal Service for assistance.

After you have signed the contract, you should receive a signed copy within 14 days. In addition, you should receive regular account statements that include:

all fees and charges;
details of each amount of credit provided during the statement period;
the name of the merchant in any credit card purchases;
interest charges, including when they were charged;
the annual percentage rate, and any changes made to it during the statement period;
the opening and closing balances for the statement period;
the date when the statement period begins and ends;
payments and transfers to and from other accounts;
the minimum payment owed and the due date for that payment;
insurance payments made, including the insurer’s name and any commission paid; and
any corrections made to previous accounts.

In addition, a borrower or guarantor will be supplied with the following on request:

the current balance of their account;
any amounts credited or debited during a specific period;
any overdue payments and the due date; and
any amount payable and the date it became due.

Changing credit contracts

Changes by agreement

If you come to an agreement with your credit provider to change the terms of your contract, the credit provider must give you a written notice within 20 days of the agreement showing details of the proposed change.

Changes made by the credit provider alone

Credit providers can make a change to the credit contract without consulting the borrower (for example, a change to the interest rate, or the introduction of a new fee) so long as the contract allows them to do so and they follow the requirements for giving notice that are set out under the Code.

If the change involves an increase to credit fees or charges, the credit provider must give the borrower 30 days written notice. If the credit provider wants to change the interest rate, generally they must notify you not later than the day on which the change takes effect. If the amount, frequency or method of calculation of repayments is to be changed, the credit provider must give you at least 20 days written notice before the change takes effect (unless the change reduces your obligations).

Changes made by the borrower alone

It is only possible to back out of a contract once you have signed it if you have not yet received the credit under the contract. If this is the case, you can end the agreement by sending the credit provider a written notice to this effect. If a borrower, guarantor or mortgagor feels that their contract contains unfair terms and conditions, they can apply to the State Administrative Tribunal to have the contract re-opened and changed to better suit their needs.

In addition, it may be able to terminate a sale contract to buy the goods or services if you cannot find finance to pay for them (provided you make it known to the supplier of those goods or services that you require finance). In some cases you could also get out of a linked loan contract if the sale contract is terminated.

Documentation for long leases

If you decide to hire goods for longer than four months, your lease documenation should include:

a clear description or identification of the goods hired;
the amount of any deposit or any other thing of value needed before goods are hired;
the amount of any stamp duty or other Government charges required to be paid;
any fees or charges not included in the standard rental charge;
the amount of each rental payment;
the date when the first rental payment is due;
when rental payments are due including specific dates or the time between payments;
the number of rental payments due;
the total amount of rent to be paid;
a statement of the conditions under which a lease can be terminated;
a statement of any liabilities incurred if a lease is terminated.

For more information on credit contracts, visit the Uniform Consumer Credit Code website.