What to Consider when Entering into a Secured Loan

Loans for many different purposes may be secured by assets such as family homes, investments properties or business premises. Ultimately the level of statutory protection provided to borrowers varies heavily depending on the size of the borrower, the purpose of the loan and the type of lender. Commercial loans typically have the least statutory protection against unfair, deceptive, or manipulative dealings as the very nature of the commercial world lends itself to negotiation between private knowledgeable businesses that, historically, courts have been hesitant to interfere with. Contrastingly, individual consumers borrowing from the ‘big four’ banks are safeguarded from excessive interest rates, credit offerings, predatory behaviour, and other unfair dealings.



The Contract

The loan contract should be carefully examined and scrutinized to ensure there are no unfair, misleading, or unconscionable terms implicit. Although there are relevant protections for certain consumers or small businesses against these terms in the form of Australian Securities and Investments Commission Act 2001, National Consumer Credit Protection Act 2009 (Cth), Competition and Consumer Act 2010 (Cth) and various equitable doctrines, it remains safer and in the better interests of both parties for the contract to be strictly examined before agreement.

Ability to Provide Repayments

Defaulting on a loan can have serious implications upon your financial health, however, defaulting upon an asset-secured loan can affect your livelihood. Essentially, you become in default of a loan when you cease making repayments according to the terms of the agreement. The most significant consequence arising from default of an asset-secured loan is that of ‘foreclosure’. This is the procedure of essentially rendering the lenders interest in the secured property as absolute, simultaneously, extinguishing the borrowers equitable right of redemption upon completion of the debt. As its implications are quite substantial, there are restrictive provisions surrounding its enablement. Therefore, it is of utmost importance that a contract is viewed and evaluated in conjunction with your own financial position, in order to gauge whether repayment is realistic. The most effective method of court avoidance is through these preventative methods.

If you feel like you have unfairly been induced into entering a loan or if you need legal advice on a possible loan and enforcement action, Straits Lawyers are here to help. We are now offering online services in both English and Chinese. Simply book an online consultation with us via this link:

https://straits-lawyers.square.site/product/online-consultation-/11?cs=true or email us at info@holawyers.com or call us at 08 8410 9069 to arrange an appointment.

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Please note that this article does not constitute legal advice and HandO Lawyers will not be legally responsible for any actions you take based on this article.