What is a consumer credit contract

A consumer credit contract is a type of credit contract where the borrower meets all of these criteria:

• is a private individual (in other words, they are not a company or incorporated society)
• is entering the contract predominantly for personal, domestic or household purposes (as opposed to primarily for business or investment purposes)
• has to pay interest or a credit fee, or provide a security interest.

In addition, as the lender you must either:

• be in the business of providing credit (such as a finance company or bank) – although lending does not have to be your only business or main business
• be in the practice of providing credit as part of your business (such as a car dealer)
• make a practice of entering into credit contracts on behalf of someone else
• have been introduced to the borrower through a paid advisor or broker.

Exclusions

Some credit contracts aren’t consumer credit contracts, even if these conditions are met. A contract is not a consumer credit contract where:

• it is a credit sale, the amount is an agreed price, and the borrower has to pay in full for the goods or services within 2 months
• someone has overdrawn their bank account without having an agreed overdraft facility on the account
• the borrower is acting as trustee for a family trust
• it is under the Student Loan Scheme Act
• it is specifically excluded under regulations.

However, these transactions are still credit contracts and they can still be re-opened by the courts if they are oppressive.