Highlights
- The Federal Government's proposal aims to make it easier for consumers and businesses to access credit.
- The proposal will shift the onus of assessing a borrower's suitability for a loan from the creditor to the borrower.
- Creditors will no longer face civil and criminal penalties for irresponsible lending.
In the wake of COVID-19, the Federal Government has put forward a bill to reform responsible lending laws, making it easier for consumers and businesses to access credit.
If the proposal becomes a law, the loan application process for borrowers will be simplified and the lenders’ requirement to assess and verify a borrower’s ability to repay a loan will be relaxed.
Roland Bleyer is the founder of Australia’s leading independent financial comparison site specialising in personal loans, Creditworld.
He says with the lenders’ responsibility to assess and verify a borrower’s ability to repay debt relaxed, it’s important that people borrow responsibly.
Tips for borrowing responsibly
Mr Bleyer outlines some tips on how to become a more responsible borrower:
- Take an in-depth look at your finances
- Be conservative in your decision
- Compare the options to get the best deal
- Consider the potential for rate rises
- Practice living on the amount you are left with once you need to meet your repayment schedule
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