Consumer credit and guarantees

When you need legal advice

You may need legal advice if you:

• think your credit provider has not followed responsible lending requirements
• think there's an unfair contract term in your consumer credit contract
• want to withdraw from a credit contract
• want to recover money paid as a guarantor from the person who owes money (the debtor)
• have signed up as a guarantor and not received appropriate documentation
• have been signed up as a joint borrower when you should be a guarantor
• can’t afford your loan payments
• have a joint loan with a person and they aren’t paying anything towards the loan
• have a car loan and the car doesn’t work (see Basic consumer rights)
• have experienced domestic and family violence and have loans with the perpetrator
• have experienced elder abuse and contributed to loans or other financial arrangements as a result.

How to get legal advice

Consumer lending

What is a credit contract?

A credit contract is a written legal agreement to borrow money and pay it back within a set time with an extra charge (e.g. interest or fees). Examples of credit products with contracts include:

• credit cards
• personal loans
• car loans
• home loans
• small amount credit contracts
• medium amount credit contracts
• buy now pay later loans
• wage advance loans
• reverse mortgages
• consumer leases.

Responsible lending

Under the national consumer credit laws, credit providers must be registered and licensed and must only lend you money responsibly. This means they should not lend you money if they think paying it back would cause you substantial hardship.

There are special requirements for products, such as loans under $2,000, loans between $2,000 and $5,000, Buy Now Pay Later and consumer leases and guarantees.

Before signing a credit contract, the credit provider must take reasonable steps to find out:

• your needs and objectives for borrowing the money
• your current financial situation and verify this
• if you can meet the obligations of the credit contract with substantial financial hardship.

The credit provider must give you a copy of their assessment, if asked.

Get legal advice if you have any concerns about your credit providers behaviour.

Credit guides

Before you sign the credit contract, the credit provider must give you a credit guide in writing. The credit guide should detail:

• any fees you might need to pay
• the credit provider’s obligations
• the complaints dispute resolution process.

Secured credit contracts

Credit providers may ask you for security before lending you money. This makes it easier for them to get their money back if you stop making payments.

There are several things you should consider before providing security:

• The creditor will ask you to sign a legal document to give them access to your asset as security (e.g. your house).
• If you don’t repay the loan, the creditor can repossess and sell your security asset to pay the loan.
• If the creditor sells your security asset and doesn’t get enough money to cover the debt, you are still responsible for paying the amount still owing on the loan.

Financial hardship

Under the National Credit Code, you have rights when experiencing financial hardship and struggling to make loan payments. If this is you, see a financial counsellor and get legal advice.

Guarantees

Instead of an asset, a credit provider may ask you to nominate a 'guarantor' to secure a loan. A guarantor is a person who agrees to make the loan payments if you don't make them. Guarantors are legally bound to:

• ensure the borrower repays the loan
• repay the loan if the borrower doesn't do so.

Credit providers must give guarantors a copy of the credit contract and explain their rights and responsibilities before they sign a guarantee document. If they don't provide this information, the guarantee may not be valid.

Within 14 days of signing a guarantee, the credit provider must give the guarantor:

• a copy of a signed guarantee
• a copy of the credit contract or proposed credit contract.

You can write to the credit provider and withdraw from the guarantee at any time before the credit is provided under a contract.

In limited situations, you may be able to withdraw the guarantee after the credit is first provided under the credit contract.

Credit reports and defaults

If you don't repay your loan on time, the credit provider may list a default on your credit report for the unpaid amount. A credit report is a history of your previous loans and payments, which is kept by financial institutions.

Credit defaults can affect your ability to borrow money for up to 7 years.

If you think a default has been listed against you, get a copy of your credit report.

Payment history information, which lists if you have been late making a payment on your loan, is also recorded on your credit report. Financial hardships arrangements are also recorded on your credit report.

You can get a free copy of your credit history from Australian credit reporting agencies:

• Equifax
• Experian.

See Credit reporting for more information.

Unfair terms in credit contracts

The National Credit Code prevents lenders from putting an unfair term in a credit contract. The code allows for unfair contracts to be changed.

If you believe there is an unfair term in your credit contract, get legal advice.

Financial control in domestic and family violence

If you think your debt is related to financial control or domestic violence, see our domestic violence information and services.

How to get legal advice

We can’t give advice on business debts or disputes about business partnerships, or legal advice about debt related court proceedings outside of Queensland.

We may give legal advice about consumer credit contracts and disputes with financial service providers in Queensland.

Contact us

Other places to get legal advice:

• Community legal centres
• Private lawyers

Who else can help?

• Search our organisations directory

Last updated

26 May 2026

Last reviewed

27 March 2026