Business Loans Australia :: Articles

Personal Loans And The Consumer Credit Code

What should I know about personal loans and the Consumer Credit Code?

Personal Loans And The Consumer Credit Code

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Understanding your rights as a consumer is essential in dealing with complex issues like personal loans and other finance. Here we reveal, in simple terms, how the Credit Code works for you.

Introduction of Credit Code

The Consumer Credit Code commenced operation on November 1, 1996.
This is a national code that is applicable in each State.
Despite what its title suggests, it is not a code of conduct but legislation that is enforceable in certain situations where credit is offered. 
Any non-business credit transactions are governed by the Code if entered into after that date, including continuing contracts that were in force at that date.
This includes:
  • credit provided predominantly for domestic, personal or household purposes;
  • where a charge is made for the credit; and
  • credit is provided in the course of a business of providing credit, or incidental to any other business of the credit provider. Definition of credit contract The Consumer Credit Code covers a wide range of credit contracts, which is defined as:
  • the payment of a debt owed by one person to another is deferred; or
  • one person incurs a deferred debt to another. Different categories of credit under the Consumer Credit Code include:
  • instalment contracts;
  • consumer leases;
  • continuing credit.

The Consumer Credit Code covers credit contracts entered into after November 1, 1996 including:

  • all consumer credit e.g. credit cards, housing etc loans that are characterised as being domestic, personal or household - not for business purposes;
  • in all Australian jurisdictions;
  • where charges are made for the credit;
  • where the credit provider does so in the course of business.

Personal, domestic & household purposes

The Consumer Credit Code does not apply for business purposes. 

According to the Code the nature of the credit does not have to be wholly concerned with domestic credit, but will be caught by the provisions of the Consumer Credit Code if:
  • more than half the credit is for personal, domestic & household purposes; or
  • if the credit is to purchase goods that are to be used for different purposes, then the purpose is mostly for personal, domestic & household purposes.

Goods mortgages

Mortgages are a security over goods (sometimes called "chattels") or real property. 

This means that the lender has the right to take the property/goods and sell it if the borrower defaults on the loan. 
There are certain requirements that must be met before the mortgage comes under the Consumer Credit Code, including that the goods or land must be specifically described.

Applicable credit providers

For a credit contract to be covered by the Consumer Credit Code, the credit provider must supply the credit:

  • in the course of a business that provides credit; or
  • where it is incidental to any other business of the credit provider.

There is no hard and fast way to determine this, but it can be important where the seller simply allows the buyer to pay for the goods in instalments, or when a family member offers a loan. 

In the first case the contract would probably be covered by the Consumer Credit Code; in the latter case it would not be covered.

Exclusions from the Consumer Credit Code

This can be complicated, and it is always worth asking whether the contract is covered by the Consumer Credit Code. There are many situations where the Consumer Credit Code will not apply, including:

  • short term credit;
  • where credit provision occurs without contemplation e.g. a savings account goes into debit;
  • within certain limits, where the only charges are periodic or fixed and not changed according to the level of credit that is provided e.g. an annual fee to a credit card provider or a arrangement with a supplier that allows goods to be bought on account and a fixed charge is applied;
  • insurance premiums payable on instalment;
  • most pawnbroker transactions;
  • employee loans.

Credit Code & guarantees

A guarantee must be:

  • in writing;
  • signed by the guarantor;

A copy of the credit contract must be received by the guarantor. 

They must also receive a copy of a document that sets out the obligations of the guarantor under the contract.

Published: Sunday, 1st Aug 2021
Author: Paige Estritori

Rate this article

0 Comments

No comments yet. Be the first to share your thoughts.


Business Loans Articles

How to Improve Your Credit Score Before Applying for a Business Loan
How to Improve Your Credit Score Before Applying for a Business Loan
Your credit score is a crucial factor that lenders examine when you apply for a loan. It acts as a numerical representation of your creditworthiness, helping lenders to determine the risk involved in offering you a loan. Essentially, it helps them predict your ability to repay the loan based on your past financial behaviour. - read more
Business Loan Refinancing and Sustainable Business Growth
Business Loan Refinancing and Sustainable Business Growth
Business loan refinancing involves replacing existing debt with a new loan under different terms. For Australian businesses, refinancing may help improve cash flow, simplify debt management or align repayments with longer-term growth plans, but the costs and trade-offs need to be assessed carefully. - read more
Understanding Business Loan Terms and Conditions: A Guide for New Business Owners
Understanding Business Loan Terms and Conditions: A Guide for New Business Owners
Starting or growing a business often requires capital for equipment, stock, staffing, premises or day-to-day cash flow. Business loans can help fund those needs, but the details in the loan agreement determine how the finance works, what it may cost and what obligations the borrower accepts. - read more
How Business Loan Interest Rates Work in Australia
How Business Loan Interest Rates Work in Australia
Business loan interest rates in Australia vary because lenders price each loan according to the product, market conditions, business risk, security, loan term and the applicant's financial position. Understanding these factors can help SMEs compare loan offers more confidently. - read more
Flexible Business Financing in Australia: Options, Features and Application Basics
Flexible Business Financing in Australia: Options, Features and Application Basics
Flexible business financing can help Australian startups and small businesses match funding to cash flow, growth plans and operational needs. This guide explains common finance options, flexible loan features, lender considerations and practical steps for preparing a business loan application. - read more
Mezzanine Finance for Business Acquisitions in Australia
Mezzanine Finance for Business Acquisitions in Australia
Mezzanine finance is a hybrid form of business funding that sits between senior debt and equity. For Australian businesses considering acquisitions, it can help bridge a funding gap when conventional lending is not enough and owners want to limit immediate equity dilution. - read more
Customized Leasing Solutions: Finding the Right Terms for Your Business Needs
Customized Leasing Solutions: Finding the Right Terms for Your Business Needs
Equipment leasing presents a strategic financial opportunity for Australian businesses seeking to maximize operational efficiency without the hefty price tag of purchasing. As many companies strive to stay competitive and agile in a bustling economic landscape, the importance of flexible asset acquisition cannot be understated. - read more

Finance News

Payment Timing Keeps Pressure on SME Working Capital
Payment Timing Keeps Pressure on SME Working Capital
19 Aug 2026: Paige Estritori
Fresh small business indicators are again pointing to a familiar challenge for Australian SMEs: trading activity may continue, but the timing of cash receipts is still creating pressure. Recent industry commentary has highlighted uneven payment behaviour, cautious customer spending and a more deliberate approach to investment among smaller firms. For owners and finance managers, that combination can make working capital planning just as important as sales growth. - read more
Payment Delays Put Working Capital Back on the SME Agenda
Payment Delays Put Working Capital Back on the SME Agenda
12 Aug 2026: Paige Estritori
Late invoice payments are again emerging as a practical funding issue for Australian small and medium-sized businesses, with fresh industry commentary pointing to continued pressure across trade payments, cash reserves and day-to-day operating liquidity. For business owners, the message is clear: revenue on paper is not the same as cash in the bank. - read more
Rising Business Failure Risk Puts Cash Flow Back in the Lending Spotlight
Rising Business Failure Risk Puts Cash Flow Back in the Lending Spotlight
04 Aug 2026: Paige Estritori
Fresh business risk signals are reinforcing a clear message for Australian SMEs: access to credit is still available, but lenders are likely to keep asking harder questions about cash flow, repayment capacity and the resilience of each borrower’s operating model. The latest commentary around business failures, trade payment pressure and sector-specific insolvency risk points to a market where credit decisions are becoming increasingly evidence-led. - read more
Business Borrowing Momentum Is Becoming More Selective
Business Borrowing Momentum Is Becoming More Selective
28 Jul 2026: Paige Estritori
Australia's business lending market appears to be entering a more selective phase, with the latest banking signals pointing to a widening gap between larger companies still seeking capital and smaller firms taking a more cautious approach. While credit is not disappearing, lenders are increasingly focused on serviceability, cash flow consistency and the purpose behind each new facility. - read more
Small Firms Tap the Brakes on Borrowing in June
Small Firms Tap the Brakes on Borrowing in June
21 Jul 2026: Paige Estritori
Australian small businesses appear to be moving into a more defensive phase, with new Equifax data for June 2026 pointing to a sharp divide between larger companies still borrowing for expansion and SMEs conserving cash. The latest Business Market Pulse suggests overall business loan demand is still growing, but at a slower pace than the stronger credit activity recorded late last year. - read more
Small Business Tax Debt Crackdown Sharpens Cash Flow Focus
Small Business Tax Debt Crackdown Sharpens Cash Flow Focus
07 Jul 2026: Paige Estritori
Australian small businesses may soon face a more disciplined tax debt collection environment, after the Australian National Audit Office found the ATO needs clearer targets for reducing collectable small business debt. The issue is substantial: small business collectable tax debt stood at $35.9 billion in 2024-25, representing about two-thirds of total collectable tax debt. - read more
Record Commercial Card Debt Points to Fresh SME Cashflow Pressure
Record Commercial Card Debt Points to Fresh SME Cashflow Pressure
30 Jun 2026: Paige Estritori
Australian small businesses are showing another sign of financial strain, with commercial credit card debt reaching a record level at the end of June. New analysis from Credit 2024 and Primara Research indicates total commercial card debt has climbed to about $2.26 billion, with almost a quarter of that sitting in high-interest balances rather than being cleared quickly. - read more

Need Help Finding a Loan?

Start here

Let us help you explore your business finance options.
Loan Amount:
Postcode:

All quotes are provided obligation-free by a participating broker from our national referral partner network. We respect your Privacy.

All finance quotes are provided free (via our secure server) and without obligation.
We respect your privacy.

Knowledgebase
Debt Consolidation:
Debt consolidation usually involves negotiating a new loan to pay other existing loans in order to get more favourable interest rates and terms.