NEW LAWS TAKE GROAN OUT OF LOANS

Laws aimed at making it easier for Queenslanders to choose the best fixed-term loan for them will be extended for another two years, Fair Trading Minister Margaret Keech announced today.

Mrs Keech said banks and other lenders would have to continue to provide mandatory comparison rates to clients, after the Consumer Credit (Queensland) and Another Act Amendment Bill 2007 was passed by Parliament today.

“This requirement meant they had to give 'hype-free' information about interest rates and charges,” she said.

"For another two years all credit providers must continue to publish a single percentage figure - or mandatory comparison rate - which includes the interest rate, loan approval fee and any other upfront fees or associated ongoing charges.

"This makes navigating through the growing credit jungle much easier for customers as all banks, building societies, credit unions and other financial institutions will continue to use the same calculations in promoting their products.”

Mrs Keech said the mandatory comparison rate requirement under the Uniform Consumer Credit Code was introduced to make things easier for borrowers. It was due to sunset after three years.

"Before its introduction, banks and other credit providers were able to hide their true fees and charges,” she said.

“The mandatory comparison rate has given customers more confidence they are making an informed choice about which loan best suits their needs and financial situation before signing up."

Comparison rates must be provided for:

·Loans which are primarily for personal, domestic or household purposes; and

·Fixed-term consumer credit, that is, loans that must be repaid within a specified time period, such as:

oa home loan with a term of 25 years;

oa car loan with a term of five years.

Credit providers are required to show the new rate in all advertisements, at any office and at the point of receiving credit applications, including company websites.

"It's easy to be bamboozled when you try to compare loans with widely different fees, charges and interest rates," Mrs Keech said.

"This is really a way of fostering truth in lending by exposing all the variables and hidden nasties associated with loans, including the amount and term of the loan, frequency of repayments, interest rate and loan fees and charges.

"Borrowers will be able to base their loan choices on hype-free information about how much the loan will really cost."

Mandatory comparison rates do not have to be provided for continuing credit products that do not have to be repaid within a particular time period, such as credit cards.

Credit providers who break the law face court-imposed fines of up to $500,000 per offence.

For more information about the Consumer Credit Code or to obtain a fact sheet about Mandatory Comparison Rates, contact the Office of Fair Trading on 13 13 04 or visit the Office of Fair Trading website at www.fairtrading.qld.gov.au.

Media Contact: Jo Gibbons 3225 1005 or 0421 611 989