Money is an awkward topic for all of us to talk about, but sometimes it is good to share some happy stories.
We all despise predatory lenders who charge high fees and interest, especially when working with people who are most in need or desperate, but recent market activity needs celebrating.
Firstly, the Government has recently passed legislation to limit the amount of interest that can be charged on loans, meaning better controls are in place to prevent the several-hundred-percent interest rates.
The Commerce Commission has also just arranged a settlement which sees pay day loan lender Pretty Penny Loans withdraw from New Zealand and cancel all loans.
As a local budget adviser, I know this will help many families who have struggled to clear this type of lending, even though there are still other lenders in the market offering these products.
Pay day lending is short term, but the penalties are high if you default.
The $200 loan that needs to be repaid next week can suddenly be $1000 once penalty fees and interest are added and suddenly your access to credit is stopped as the defaults appear on credit reporting.
Longer term, this can halt access to loans, power supply and possibly even getting insurances.
More emphasis has also been placed on lenders to ensure loan affordability when assessing people’s ability to repay.
All lenders must abide by the responsible lending code.
We often hear that people have banked somewhere for years and then when they need a loan they get declined.
Circumstances change, legislative requirements change and methods of calculating affordability of repayments change.
Good examples are the winter energy payment made to beneficiaries, which is a temporary payment, and cash jobs which don’t show on bank statements or are not disclosed to Inland Revenue, so neither can be considered regular income.
Locally, we are fortunate to have access to Good Shepherd loans, which have been set up to help New Zealanders improve their quality of life and are provided on a not-for-profit basis.
If you are on a low income and need some help – for example, you have an unexpected repair bill or medical cost, need a new household appliance or maybe a car – then speak with us or visit goodloans.org.nz to see if our team can help you move forward in your life.
It could be that following Covid-19 your hours have been reduced, you have lost your job or debts are mounting. If so, then a visit to North Otago Budget Advisory could be a way to relieve the burden. To quote a recent client: “being able to tell somebody else about my money stress has been a huge relief, I should have come to see you months ago”.
Don’t be shy, make contact with us by phone 027 365-2959 or (03) 434-6196 for a confidential chat.
- Katrina Kelly is a financial mentor for Family Works and the North Otago Budget Advisory Service co-ordinator