Interest rate cap
The interest rate cap puts a limit on the amount of interest that can be charged on a loan and includes fees and charges.
The introduction of a rate cap is designed to protect vulnerable consumers, who have in the past been subject to extraordinary rates of up to 1600 per cent from some pay day lenders.
The decision on whether to provide a loan continues to rest with the lender. The changes simply mean that all new loans must be subject to the 48 per cent cap. If the terms of an existing contract change, it too is required to comply with the new legislation. This includes where interest rates or fees are increased, additional fees are charged or the term of the loan is changed.
The changes do not affect a borrower's right to apply for changes to their loan on the grounds of hardship. Under the 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.
There are a range of options for Queenslanders who are experiencing financial difficulty or are unable to access credit. The links below details alternatives available to for people who need to borrow money and/or access financial advice in times of short-term financial difficulty.
Need help to pay unexpected bills - a consumer guide Alternatives to high cost credit - a consumer guide
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