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Your rights and obligations: When you can cancel a credit contract


Different rights to cancel at different times

Credit Contracts and Consumer Finance Act 2003, ss 27–31, 35

You have various rights to cancel a consumer credit contract. The extent of your cancellation rights depends on whether the lender has given you all the information they’re required to in their “disclosure statement” (see: “The information you must be given”).

If you have been given this information, then you have a “cooling-off period” (usually five working days) immediately after you get that information. You can cancel the contract at any time during this cooling-off period (see below).

If you haven’t been given this information, you can cancel at any time. You’ll need to return any goods you’ve received. If you’ve already received services, you’ll have to pay the cash price for the services within 15 working days after cancelling. If the lender gives you all the necessary information later on, and you haven’t already cancelled by then, the cooling-off period starts at that point.

If you cancel, you may have to pay:

  • the lender’s cancellation expenses – but these must be reasonable
  • interest for the time that you had the credit
  • for any damage to goods that happened while you had them.

Credit Contracts and Consumer Finance Act 2003, s 29

Note: There’s usually no right to cancel when credit is provided for a period stated in the contract that’s less than two months (“short-term consumer credit contracts”). You also can’t cancel a consumer credit contract only because disclosure hasn’t been made to a guarantor (see: “Guarantors”).

Cancelling during the “cooling off” period

Credit Contracts and Consumer Finance Act 2003, ss 27, 28, 30, 31

If you’ve signed a consumer credit contract, you have a “cooling off” period – usually five working days – during which you can change your mind and cancel the contract.

The length of the cooling-off period depends on how the lender gave you the necessary information:

  • If the paperwork was handed to you directly, you have five working days.
  • If it was sent to you electronically (by email for example), you have seven working days.
  • If it was mailed to you, you have nine working days from the date it was posted.

Note: The cooling-off period starts once the lender has given you all the information that the law requires. If the lender hasn’t given you all the necessary information, you can cancel the contract at any time.

How do I cancel?

The cancellation must be in writing. There’s no specific wording you have to use – it can be worded in any way that shows you intend to cancel the contract.

What happens once I’ve cancelled?

If you cancel a consumer credit contract (either during the cooling-off period or when the lender has failed to give you all the information the law requires), you’ll need to do different things depending on the type of credit arrangement it is.

  • If it’s a hire purchase (“credit sale”) for goods or services, your rights will depend on whether you’ve already received the goods or services before you cancel:
    • If you’ve already received the goods or services, you’ll only be able to cancel the credit part of the contract, so you’ll still have to pay the cash price of the goods or services. You’ll have 15 working days to do this after you cancel.
    • If you haven’t already received the goods or services, you can cancel the whole contract, and you won’t have to pay for the goods or services.
  • If it’s a loan, and you’ve already received money under the loan contract, you can cancel the whole contract by returning the money within the cooling-off period.
Next Section | Interest and fees

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Credit and debt

Where to go for more support

Legal information and support groups

Community Law

Your local Community Law Centre can provide you with free initial legal advice.

Find your local Community Law Centre online: www.communitylaw.org.nz/our-law-centres

Consumer Protection

The Consumer Protection website has useful information on a range of consumer topics. Consumer Protection is part of the Ministry of Business, Innovation, and Employment (MBIE).

Website: www.consumerprotection.govt.nz
Email: cpinfo@mbie.govt.nz
Phone: 0508 426 678 (0508 4 CONSUMER)

Consumer NZ

The Consumer NZ website provides a wide range of information on consumer issues and template letters you can use to write to traders to enforce your rights.

Website: www.consumer.org.nz
Email: info@consumer.org.nz
Phone: 0800 226 786 (0800 CONSUMER)

Commerce Commission

The Commerce Commission enforces the laws against misleading and deceptive conduct by traders (the Fair Trading Act) and the consumer credit legislation (the Credit Contracts and Consumer Finance Act). The Commission provides information on these areas on its website.

Website: www.comcom.govt.nz
Email: contact@comcom.govt.nz
Phone: 0800 943 600

To make a complaint online: comcom.govt.nz/make-a-complaint

To read consumer rights in different languages: comcom.govt.nz/consumers/read-about-your-consumer-rights-and-business-responsibilities-in-another-language

Citizens Advice Bureau (CAB)

CAB provides free, confidential and independent information and advice. See CAB’s website for valuable information on a range of topics.

Website: www.cab.org.nz
Phone: 0800 367 222
Facebook: www.facebook.com/citizensadvicenz

Find your local CAB office: www.cab.org.nz/find-a-cab

FinCap and Money Talks

FinCap is a non-government organisation providing free financial mentoring services.

Website: www.fincap.org.nz
Email: kiaora@fincap.org.nz
Phone: 04 471 1420

MoneyTalks is a financial capability helpline operated by FinCap. The Financial Mentors offer free, confidential advice by phone, text, email and live chat.

Email: help@moneytalks.co.nz
Phone: 0800 345 123
Text: 4029
Live chat: www.moneytalks.co.nz

Insolvency and Trustee Service (ITS)

The ITS deals with bankruptcies, no-asset procedures, summary instalment orders and some company liquidations. Information about those processes is available on its website. The ITS is part of the Ministry of Business, Innovation and Employment (MBIE).

Website: www.insolvency.govt.nz
Phone: 0508 INSOLVENCY (0508 467 658)

Dispute Resolution Schemes

There are four dispute resolution schemes for consumers dealing with lenders and other credit providers. Contact the scheme your service provider has registered with.

1. Financial Services Complaints

Website: fscl.org.nz
Phone: 0800 347 257

2. Insurance & Financial Services Ombudsman

Website: www.ifso.nz
Phone: 0800 888 202

3. Banking Ombudsman

Website: www.bankomb.org.nz
Phone: 0800 805 950

4. Financial Dispute Resolution Service

Website: www.fdrs.org.nz
Phone: 0508 337 337

Credit Reporting

Your credit record

There are three credit reporting companies that operate nationally in New Zealand. To check your record or correct any information, you’ll need to contact them all.

You’re entitled to a free copy of your credit record. You should make sure you choose the free option when you contact each company.

1. Centrix – www.centrix.co.nz – 0800 236 874
2. Illion – www.illion.co.nz – 0800 733 707
3. Equifax – www.equifax.co.nz – 0800 698 332

Personal Properties Securities Register (PPSR)

Search the PPSR register to see if there is any security interest registered against a vehicle. This can be done for a small fee by registering to check online.

Website: www.ppsr.companiesoffice.govt.nz

Privacy Commissioner

The Privacy Commissioner has information on your rights in relation to credit reporting and how to complain if you feel your rights have been breached.

Website: www.privacy.org.nz
Email: enquiries@privacy.org.nz
Phone: 0800 803 909

To make a complaint online: go to the website above and select “Your rights tab” then “Complaining to the Privacy Commissioner”

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