1. What is the Points and Fees Test?

The Points and Fees Test is a requirement under Australian lending laws to ensure that the total charges for a loan don't exceed a specified cap amount. It's designed to protect consumers from excessive fees.

2. How Does the Calculator Work?

The calculator performs a simple comparison:

Where:

• \( \text{Sum of Charges} \) — Total of all fees and charges associated with the loan (AUD)
• \( \text{Cap} \) — Maximum allowable amount under regulations (AUD)

Explanation: If the sum of charges is less than or equal to the cap, the loan passes the test. If not, it fails.

3. Importance of the Test

Details: Passing this test is crucial for loan compliance in Australia. Lenders must ensure their fee structures meet regulatory requirements to avoid penalties and protect consumers.

4. Using the Calculator

Tips: Enter the total sum of all loan charges in AUD and the applicable cap amount in AUD. The calculator will determine if the loan passes or fails the test.

5. Frequently Asked Questions (FAQ)

Q1: What charges are included in the sum?
A: Typically includes all upfront fees, points, and charges associated with obtaining the loan.

Q2: How is the cap amount determined?
A: The cap is set by Australian regulations and may vary based on loan type and amount.

Q3: What happens if a loan fails the test?
A: The lender may need to adjust their fee structure or the loan may be considered non-compliant.

Q4: Are there exemptions to this test?
A: Some loan types may have different requirements - consult Australian lending regulations.

Q5: How often should this test be performed?
A: For lenders, this should be part of the standard loan assessment process for each application.