Definitions
- Balloon payment
- a large repayment due at the end of the loan and additional to your regular repayments.
- Collateral
- property that is contractually pledged to secure a loan or debt. A credit provider takes collateral to protect it against a borrower's default.
- Consumer guarantees
- are rights and responsibilities in relation to the supply of goods and services to consumers. Goods must be of acceptable quality, free from defects and fit for the purpose they would normally be used for.
- Contract to buy a motor vehicle
- a legally binding agreement to purchase a motor vehicle.
- Cooling off period
- a specified number of days given to cancel the contract to buy a motor vehicle without penalty. There is no cooling off period in Western Australia!
- Credit Information file
- credit reporting agencies maintain files on most individuals containing information about credit applications and defaults. These are used to assess credit applications.
- External Dispute Resolution Scheme
- schemes that handle complaints made by consumers about banks and financial institutions. These are free and have the power to make binding decisions on financial institutions.
- Hardship variation
- variation of the terms of a loan contract with the approval of the credit provider on the grounds of hardship. Hardship may include loss of employment or ill health.
- Property Seizure Sale Order
- in order to recover a judgment debt, a judgment creditor may apply to the court for an order authorising the Sheriff to seize and sell the judgment debtor’s property to wholly or partially satisfy the judgment debt.
- Security
- is an asset offered by a borrower to a lender as ‘collateral’. If the borrower defaults on repayment of the loan, the lender has the right to sell the asset and retain proceeds of sale up to the amount owing.
- Shortfall debt
- often a debt remains owing to the credit provider after a car is repossessed and sold. This is because the proceeds of sale do not cover the money owing under the loan contract. This is referred to as a shortfall debt.
- Subject to finance
- a term used to make a contract subject to finance approval. If you fail to obtain finance after making reasonable endeavours, you are generally able to cancel the contract without penalty.