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Is private lending legal in Australia?
Yes, private lending legal in Australia is the norm, not the exception: people and companies can lend money and take security. The rules depend on the purpose. Consumer loans need an Australian credit licence and follow the National Credit Code. Business and investment loans are mostly outside that code, but other consumer and contract laws still apply.
Written by Richard Goodwin, Founder and author, PrivetReviewed by Privet Team, Editorial review team, PrivetLast reviewed 23 October 2026
Consumer loans and the National Credit Code
If a loan is mainly for personal, domestic or household use, or to buy or renovate a home you live in, the National Credit Code usually applies. The lender must hold a licence or be an authorised credit representative, assess whether the loan is not unsuitable, and belong to the Australian Financial Complaints Authority.
Business-purpose loans
Business-purpose loans, such as funding a development, buying commercial property or business working capital, are generally not regulated by the Code. Lenders often ask you to sign a business purpose declaration. Only sign it if it is true: a false declaration can remove protections you would otherwise have.
Even outside the Code, the ASIC Act bans misleading and unconscionable conduct, and unfair contract terms rules can apply to small business loans.
How to check a lender is legitimate
Step-by-step help is in the ASIC registers guide.
- Search the lender's credit licence or representative number on ASIC's professional registers.
- Check the company name and ABN on ASIC and the Australian Business Register.
- Look for AFCA membership if it lends to consumers.
- Ask your lawyer to review the loan and mortgage documents.
Frequently asked questions
Can an individual lend money privately in Australia?
Yes. Individuals can lend and take a mortgage as security. Lending to consumers as a business needs a credit licence; occasional or business-purpose lending has fewer rules. Get legal advice before you lend.
Where can I complain about a private lender?
If the lender is an AFCA member, you can complain to AFCA for free after using its internal complaints process. See the [AFCA guide](/guides/afca-complaints-for-borrowers).
Related guides
- Asic registers guide
- How to check a lender
- Afca complaints for borrowers
- Private lending Australia: how it works in every state
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Privet (2026). Is private lending legal in Australia?. Retrieved from https://privet.com.au/is-private-lending-legal-in-australia
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