New South Wales Consolidated Acts

CREDIT ACT 1984 - SECT 170

170 Contract void if annual percentage rate exceeds maximum rate

(1) A credit provider must not enter into a regulated contract if the annual percentage rate in respect of the contract exceeds the "maximum rate". The maximum rate, for the purposes of this section, is 4 times the prescribed rate of interest under section 101 of the Civil Procedure Act 2005 at the time the contract is entered into.

Maximum penalty: 25 penalty units.

(2) A regulated contract (including any mortgage in so far as it relates to the contract) is void if it is entered into in contravention of subsection (1).

(3) However, it is not a contravention of subsection (1) for a credit provider to enter into a regulated contract in respect of which the annual percentage rate exceeds the maximum rate if:

(a) the amount financed under the contract does not exceed $2,000, and

(b) the credit provider has not, within the period of 2 years before the date of the contract, engaged in any business with respect to the provision of credit to the debtor, the debtor’s spouse or any member of the debtor’s family residing with the debtor at the date of the contract, and

(c) the annual percentage rate calculated by reference to the credit charge payable under the contract, reduced by an amount which is the lesser of 7% of the amount financed or $35, does not exceed the maximum rate.

(4) If, by the operation of this section, a regulated contract is void, the debtor is entitled to recover from the credit provider as a debt any amount paid to the credit provider under the contract.

(5) The regulations may make provision for the inclusion in any regulated contract of a statement relating to the annual percentage rate of the contract or to the maximum rate (or to both).

(6) Nothing in this section affects the powers of the Tribunal under Part 9 in relation to a contract or mortgage that is not, by reason of this section, void.