Lenders of instant cash loans in Australia who conscientiously adhere to the legal requirements as laid down by the Regulatory Guide 209 need to understand that under the National Credit Act, it is presumed that, if a borrower will only be able to comply with their financial obligations under the loan contract by selling their principal place of residence, then the borrower could only comply with those obligations with substantial financial hardship, unless the contrary is established. The effect of this is that where a borrower establishes that they could only meet the repayments by selling their home, then the onus is on the loan lender to establish that the loan contract is not unsuitable. The law allows loan lenders to exercise judgement in the application of this requirement.
Lenders of instant cash loans in Australia need to realise that when assessing whether a loan contract will cause a borrower to experience substantial financial hardship, a loan lender might set one or more levels of realistic family living expenses required to meet the borrower’s and their dependants living costs. The borrower would need to be able to meet these living costs from their income, after deducting the ongoing repayments under the loan contract and all other repayments and regular financial commitments expected of the borrower. Below this level, the lender would, as a policy, not consider the borrower to have the capacity to repay the loan without substantial financial hardship, regardless of their circumstances. The following are temporary periods where the borrower will experience no income. A borrower wishes to enhance their chances of a promotion in the future by undertaking tertiary study on a vocational course with direct relevance to their chosen job.
The borrower of instant cash loans in Australia seeks credit to pay for the course. Their employer has given assurances that the borrower will be able to take their job back at the end of the course, if they do not obtain a higher paid one within the firm on the basis of the new qualification. However, for the duration of the course, the borrower will only be able to meet their loan repayments under the proposed credit contract by making serious cutbacks on their expenditure. The borrower has indicated they are willing to incur this short term hardship for the purpose of improving their long term prospects and they have a realistic plan for economising so that they can still meet their minimum loan repayments. In this case, the loan lender may conclude that the borrower would have the capacity to repay without substantial financial hardship, even if most other individuals, with a different purpose for the loan funds, would not.