If you’ve been considering taking out a private or business loan, you may have come across the term “responsible lender”.
The phrase isn’t just a descriptor thrown around to gain trust – it means the company is following a specific governmental code under the National Consumer Credit Protection Act of 2009. This act requires credited licensees in Australia to follow three steps as a way to ensure that you, the consumer, are able to pay back the loan you’re requesting.
So what are the responsible lending conduct obligations?
- The credit licensee is required to make inquiries about your financial situation to ascertain whether you can meet the payment plan. The inquiries must be reasonable for the type of loan you’re discussing, so if you’re applying for a mortgage or other large loans, expect them to do far more interrogating than they would for a small cash loan.
- As part of their investigation, they must verify your financial situation in a reasonable manner. With this evidence, they’ll determine if you can meet your financial obligations and repay them on their terms. If they foresee the loan causing you “substantial hardship,” they will deem the loan unsuitable – a decision that keeps your best interests in mind.
- If the credit contract is deemed “unsuitable”, the company is required to provide a written assessment upon request. As a consumer, you’re entitled to the information you need explaining the decision, so if you find yourself in this situation, don’t hesitate to speak up.
- In the end, the responsible lending conduct obligations are there to protect all parties involved in the situation. At Speedy Finance, we’ll work with you under these rules set out by the National Credit Act to make sure you get the financial loans or business funding you need!