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Personal lending: What to think about before you borrow
Most New Zealanders borrow money at some point during their lives. If you’re thinking about taking out a loan or other credit facility, it’s a good idea to look at all your options, so you can make an informed decision.
3 minute read
In New Zealand, lenders such as BNZ are regulated by the Credit Contracts and Consumer Finance Act 2003 (CCCFA) and guided by the Responsible Lending Code. The purpose of this legislation is to make sure lenders exercise care and diligence when providing personal lending to customers.
When you apply for any personal lending with BNZ we have a responsibility to fully understand your needs and situation, so we can provide you with suitable information about your lending options. To do this, we’ll ask you for a range of information such as who you are, your employment history, what you intend to use the lending for, and a lot about your finances, including any savings or deposits, your expenses, and your debts.
We'll make sure we provide you with clear information so you can understand all aspects of the borrowing and can make full and informed decisions. We can also give you guidance on where you can go for free and independent budgeting advice.
Think about your options
Borrowing money can have a big impact on your life, so it’s important that you do your homework to help you make the decision that’s right for you. Depending on what your need is, a loan may not always be the best solution. For example, if you were wanting to buy some new furniture, you could plan to save up for the purchase in advance, which may cost you less overall, or compare buying second-hand instead of new. Looking at all the options can help you decide what is best for your situation.
Understand all the information
Look at all the available information about different borrowing options. You should factor in all the ongoing costs such as fees, interest, and total cost of the loan, and understand what would happen if you missed your repayments. Consider any future changes to your personal situation that could affect your ability to pay the loan, such as nearing retirement or having a baby, as this could influence how quickly you plan to pay the loan off.
Create a budget
If you apply for a loan, you’re going to be asked a lot of details about your finances, so it’ll help to know the money that’s coming in and going out. This will show you whether you have any extra left over after paying your bills that you could put towards paying back a loan.
Talk to someone independent
It’s a great idea to talk to someone independent when you’re looking at borrowing money. Depending on your particular credit contract, there are a range of consequences that might apply if you fail to meet your payment obligations. These could include default fees or interest, repossession of secured property, or requiring a guarantor to repay lending.
If you're a BNZ customer, information about the consequences of default is set out in your terms and conditions. If you have any questions about the consequences of default for your credit contract, or if you are having any difficulties meeting your repayments, please get in touch with us.
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BNZ lending criteria, terms and conditions and fees apply to BNZ products.
This article is solely for information purposes. It’s not financial or other professional advice. For help, please contact BNZ or your professional adviser. No party, including BNZ, is liable for direct or indirect loss or damage resulting from the content of this article.
References to third party websites are provided for your convenience only. BNZ accepts no responsibility for the availability or content of such websites.