Interest rate cap
A maximum cap of 48 per cent per year now applies on all new consumer credit contracts in Queensland. The cap puts a limit on the amount of interest, fees and charges a lender can put on a loan.
The capped rate protects vulnerable consumers from the pay-day lenders who, in the past, have charged extraordinary interest rates up to 1600 per cent.
The lender still decides whether to provide a loan. The changes simply mean that all new loans must be subject to the 48 per cent cap.
If an existing contract´s terms change, it must comply with the new legislation. These changes include when interest rates or fees increase, additional fees are charged or the term of the loan changes.
Changing a contract´s terms
The interest rate cap does not affect a borrower's right to apply for changes to their loan on the grounds of hardship. Under the National Consumer Credit Code, any borrower facing hardship because of illness, unemployment or other reasonable cause can apply to the lender to change the terms of their contract. For more information about applying for hardship visit the ASIC consumer website.
There are a range of options for Queenslanders who are experiencing financial difficulty or are unable to access credit. See getting help for hardship.
Last reviewed 11/04/2013