Look-Alike Contracts in Australia: 2025 Guide for Borrowers

Look-alike contracts are quietly reshaping how Australians borrow, lease, and finance everything from cars to solar panels. With regulators sharpening their focus and lenders pushing the boundaries, 2025 is set to be a pivotal year for these controversial agreements. Whether you’re a consumer, small business owner, or finance broker, knowing how to spot—and avoid—look-alike contracts is crucial to protecting your bottom line.

What Are Look-Alike Contracts?

At first glance, a look-alike contract can seem like any ordinary finance or lease agreement. The difference lies in the details. These contracts are structured to mimic regulated credit products—such as personal loans or consumer leases—while sidestepping key consumer protections and responsible lending laws.

For example, a business might offer a “rent-to-own” agreement for home solar panels that looks like a standard loan, but because it’s technically a lease, it falls outside the National Consumer Credit Protection Act (NCCP Act). This means:

• No responsible lending obligations

• Potentially higher fees and costs

• Fewer avenues for dispute resolution

Common types of look-alike contracts in Australia include:

• Consumer leases for household goods

• Rent-to-buy car agreements

• Short-term or indefinite rental contracts for technology and appliances

• ‘Business purpose’ loans for sole traders that mimic personal loans

Why Look-Alike Contracts Are Under the Microscope in 2025

The Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC) have flagged look-alike contracts as a major risk for consumers in 2025. Following several high-profile enforcement actions in 2024, regulators are warning that some providers are designing products to exploit legal loopholes—leaving borrowers exposed.

Key developments in 2025 include:

• ASIC’s 2025 Compliance Priorities: ASIC’s annual regulatory priorities now specifically target “credit-like” contracts, with expanded surveillance and new guidance for lenders.

• Reform of the Consumer Credit Code: The federal government is consulting on amending the NCCP Act to close loopholes used by look-alike contract providers. Draft legislation is expected to be tabled in Parliament by late 2025.

• High-Profile Cases: In early 2025, a major fintech was fined over $3 million for using rental contracts that disguised the true cost of credit, sparking renewed debate about ethical lending.

For small businesses and gig workers, the risks are amplified. Many ‘business purpose’ look-alike loans carry interest rates and fees far above those allowed under consumer lending rules.

How to Identify—and Avoid—Look-Alike Contracts

Spotting a look-alike contract isn’t always easy, especially when the paperwork is designed to look familiar. Here’s what to watch for in 2025:

• Missing Credit Disclosures: If your contract doesn’t clearly state your interest rate, annual percentage rate (APR), or total repayments, it may fall outside regulated lending laws.

• Unusual Ownership Terms: If you don’t immediately own the asset (like a car or appliance) but are responsible for all maintenance and insurance, you might be dealing with a lease masquerading as a loan.

• ‘Business Purpose’ Boxes: Be cautious if you’re asked to tick a box stating the loan is for business purposes, especially if it’s really for personal use. This can strip away your consumer protections.

• High Fees and Residual Payments: Look-alike contracts often bundle large upfront fees, balloon payments, or complex residuals that make the cost much higher than advertised.

Real-world example: In Victoria, a 2025 case involved a family signing a rent-to-own agreement for solar panels. The contract appeared similar to a green loan, but because it was technically a lease, the provider could charge fees that pushed the total cost to nearly double the advertised price. The family had little recourse under consumer credit law.

What Borrowers and Businesses Can Do in 2025

With look-alike contracts under greater scrutiny, Australians should:

• Read the fine print: Always check whether the contract is covered by the NCCP Act or other consumer protection laws.

• Ask direct questions: Is this a loan, a lease, or a rental? Who owns the asset during and after the agreement?

• Compare total costs: Don’t just focus on monthly repayments—calculate the total you’ll pay over the life of the contract.

• Check for regulatory updates: The rules are changing quickly in 2025, so keep an eye on ASIC and ACCC announcements.

• Report concerns: If you suspect a provider is using a look-alike contract to avoid regulations, report it to ASIC or your state consumer affairs body.

The Bottom Line: Stay Sharp in 2025

Look-alike contracts are evolving fast, and regulators are racing to keep up. For Australians seeking finance this year, the best defence is knowledge. By understanding what look-alike contracts are, how to spot them, and what new rules are on the horizon, borrowers and small businesses can make smarter, safer choices in 2025.