Loans and Credit

Take time before you sign any credit contract or loan agreement. It’s important to understand fees and charges, interest, your payment obligations, and what to do if you are behind in payments. MoneyTalks is a free helpline providing budgeting advice for individuals, family and whānau. Find a Financial Mentor near you or contact 0800 345 123 to talk to a trained Financial Mentor

Tips

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Take time before you sign
A rushed decision can be costly when borrowing money. It’s good to ask: “do I need to borrow the money?” Loans, and the paperwork that go with them, can be confusing. Make sure you ask questions about what you are agreeing to and what your payment obligations are.
Work out how much the loan will cost you before you agree to it
You can use the Sorted debt calculator to work out what the loan will cost each month and in total: www.sorted.org.nz. It’s also a good idea to talk to a Financial Mentor about your budget and how a loan will impact on your finances. MoneyTalks provides free budgeting advice to individuals, family and whānau. Contact 0800 345 123 to talk to a trained Financial Mentor.
Check the fees and charges
All loans will have fees and charges. Ask the lender to clarify all fees and charges over the full repayment period. The documents the lender provides should show these clearly. There can be break fees (penalties for paying off the loan early), fees for missing payments and administration fees.
If you have money problems, talk to your lender as soon as possible
As soon as you have an issue with the loan repayments, get in touch with your lender and discuss it with them. Lenders may allow you to extend the time or restructure your obligations to make them more manageable. MoneyTalks provides free budgeting advice. Contact: 0800 345 123
There are laws to protect consumers when you borrow money
The Credit Contracts and Consumer Finance Act (CCCFA) requires lenders to act responsibly, and ensures borrowers are able to make informed choices about what they are agreeing to. The Responsible Lending Code further explains lender responsibilities. The NZ Commerce Commission outlines key lending principles and responsibilities.

Common Issues

In lending and other financial services, issues often arise from unclear terms and conditions, unexpected fees or charges, or unaffordable lending. By knowing what to look out for, you can better protect yourself and make more informed decisions. Read our quick guides to common issues below.

Add-on products

Fees and charges

Information lenders must provide

Unaffordable and unsuitable lending

Unforeseen hardship

Cases

Lender breaches responsible lending obligations

Pete made a complaint saying that the credit limit increases he was given were unaffordable.

Unaffordable loan given to gambler

Benson's lender didn't make reasonable inquiries to check his loan was affordable.

Lending based on uncertain overtime and incorrect expenses

A financial mentor was able to help Jake get all the interest and fees on his loan refunded.

Financial mentor helps couple through unaffordable loan

Mr and Mrs J had English as a second language, it was unclear if the refinancing and additional loan...

Responsible lending disputed

Beneficiary caring for three grandchildren given loan she couldn't repay

Mrs Clayton* was given a loan despite having three bank balances of $0 and making regular payments t...

$43K loan, ute repossessed

The CCCFA sets out lender responsibilities for consumer protection.

Charlie, who had terminal cancer, couldn't work or pay off a $43,000 loan. Charlie’s ute was reposessed.

No home, 4 loans, responsible lending?

Lender responsibilities aim to protect consumers against substantial hardship.

Ann's house was demolished and she told her lender she couldn't repay her 4 loans. She later received a repossession notice.

$4,000 vacuum debt written off

Lenders must ask for information about the borrower’s ability to repay the loan under the CCCFA

Mrs B entered into a loan agreement to buy a $4,000 vacuum cleaner, sold to her by a door-to-door salesperson.

Three loans, no redundancy cover

Lenders must ask for up-to-date evidence about a borrower’s ability to repay a loan

When Bev borrowed $17K for a car, she purchased payment waiver, but later discovered it didn’t cover redundancy.

Financial hardship, no evidence provided

The CCFA has rules for lenders about hardship applications and fees.

After Dan took out a loan, he said money had been stolen from his bank, and he’d lost his job. But he had no proof.

35 unauthorised credit card transactions

Failing to safeguard your credit card PIN could mean you are liable for unauthorised transactions.

Sharee complained that 35 unauthorised transactions were made with her credit card in NZ during the month she was overseas.

How can I find out how much I still owe on my loan and how this is calculated?

Write to your lender to ask for copies of statements showing payments and any fees or interest which has been applied. You should then check these statements to make sure you understand any fees or interest and that they record all payments you have made. If you need any help with this, your local Budgeting service or Citizens Advice Bureau may be able to assist you.

If you have any problems getting this information or disagree with the statements, make a complaint to your lender.

I’m behind in my loan payments, what should I do?

Contact your provider and explain your situation. You may be able to ask for a payment holiday.

You could also contact your local Budgeting service who provide free, independent and confidential assistance and can work with you to put together a repayment plan.

The fees/ interest that is being charged on my loan is too high; can the IFSO Scheme help me?

Check your loan agreement to see what interest rates you agreed to when you took out the loan. If you need any help calculating what the payments should be, contact Money Talks: moneytalks.co.nz

If you want to make a complaint, first make a complaint to your provider or call us on 0800 888 202 and we can help you with next steps.

Is my lender subject to a standard of care or code of conduct?

Yes, all lenders are subject to lending regulations and the Credit Contracts and Consumer Finance Act (CCCFA) which requires lenders to act responsibly, and ensures borrowers are able to make informed choices about what they are agreeing to. The Commerce Commission website and the Responsible Lending Code further provides guidance on the lender responsibilities.

Many lending companies are members of the Financial Services Federation (FSF) which provides helpful consumer information on responsible borrowing. FSF members subscribe to the Responsible Lending Guidelines and Responsible Credit-related Insurance Code and Responsible Mobile Shop Code.

I think I've been given an unaffordable loan, what should I do?

Read our information about unaffordable and unsuitable lending. You can request a review through your lender’s internal complaints process. If you are unhappy with the complaint response, you can ask the IFSO Scheme to investigate your complaint, for free.

Guides

Remedies for Irresponsible Lending Guide
This guide explains the approach we take when deciding what should happen if people have been given unaffordable or unsuitable loans.

Guide to compensation
This guide outlines how we approach compensation, with examples of how we assess what’s needed to put things right based on the facts of each complaint.

The following sites may be helpful for further information or budgeting advice:

Money Talks

Te Ara Ahunga Ora Retirement Commission

Citizens Advice Bureau

Related websites:

NZ Commerce Commission (The regulatory body for consumer credit)

Financial Services Federation (Federation of major lending organisations)

Our Glossary explains the meaning of technical terms used in tips and cases.