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All About Instalment Contracts

Updated: Feb 29

In my last interview with Tony Cordato on the legalities of Property Vendor Financing, he talked about the monthly instalments the Buyer or Wrappee had to pay to the Vendor or Wrapper.

It's similar to buying a normal house. Instead of having the Bank Loan, you have an Instalment Plan. That's why it's called Vendor Finance, and not Bank Finance. In the case of a Bank Loan, the paperwork is called a Loan Agreement. With Vendor Finance, the legal paperwork for a mortgage is called the Finance Instalment Contract. - Tony Cordato

Instalment Contracts are loan contracts which are governed by the National Credit Act and National Credit Code, that is, under the National Consumer Credit Protection Act 2009 (Commonwealth) which applies throughout Australia.

Instalment Contracts | Paul Zalitis | The Aussie Wrapper

The National Credit Act requires that lenders must make “reasonable inquiries about a consumer's financial situation, and their requirements and objectives” - that is, follow the responsible lending rules. An Australian Credit Licence holder needs to carry out this credit assessment.

The National Credit Code requires lenders to give credit disclosures and documents to consumers which give information about the vendor finance – such as expected repayment amounts, total cost of the loan, features and upfront fees.

A vendor does not need to hold a credit licence for a ‘one-off’ or even a ‘two-off’ Instalment Contract. But if the vendor carries on the business of selling property using Instalment Contracts, an Australian Credit Licence is necessary.

Other than that, there are no specific restrictions on the use of Instalment Contracts in New South Wales or in Western Australia. Restrictions apply in Queensland, Victoria and South Australia. Thanks to Tony Cordato

To Your Success Paul Zalitis The Aussie Wrapper


About Paul Zalitis, the Aussie Wrapper

What I’ve been doing is helping mates create positive cash flow and helping them achieve their dreams of owning property and building their finances through Property Vendor Financing.

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