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ARTICLE · 07 MAY 2025

Lenders charging over 48% cap

Sophie Grace Pty Ltd
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Company attempted to style selling goods as consumer leases when they were credit contracts.

AustraliaFinance and Banking
Chloe Yoo
Chloe Yoo
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The Federal Court's decision and ASIC's regulatory action against Rent4Keeps is a warning for licensees issuing credit contracts (loans) to consumers.

The Federal Court found that Rent4Keeps and its largest franchise Darranda Pty Ltd, had attempted to style the selling of everyday goods, such as furniture, electronics and whitegoods as "consumer leases" when in fact they were credit contracts. The court found that as a result, Rent4Keeps contravened the 48% annual rate cap and other requirements under the National Credit Act.

Under section 32A of Schedule 1 of the National Credit Act ("National Credit Code"), credit providers cannot charge consumers an annual cost rate that exceeds 48% ("the 48% cap"). There are exemptions from the annual cost rate cap, including for:

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