Every now and then, even if you are a great financial planner, there comes a time when you need a quick cash injection for something important. You find yourself running short on cash and it can be for a number of reasons. This is where you look towards either family and friends or opt for a professional service offering quick loans.
But if you haven’t used a professional service, you may have your doubts and may not be entirely sure about what is available out there. So, if you are wondering whether getting a person is a good idea, in this article, we discuss in detail the different kinds of loans available. While there are a number of quality services that provide loans in New Zealand, it is important that you have an understanding before you opt for taking out a loan. As with all matters financial, it is vital to do your due diligence before any kind of commitment.
If you’ve never taken out a loan before, you need to understand that because each individual situation is different, personal loans are provided after assessing your individual situation. Usually, you should be able to secure a loan against a variety of personal property, with competitive interest rates and a repayment schedule of your choice.
You can choose to take out a personal loan for a variety of reasons. Some of the most common ones include
- Urgent School Fees for your children
- A credit card bill that will charge over the top after the deadline
- Your home needs an emergency repair
- You decide to move to the house
- You want to finance a vacation or a family holiday
- You decide to buy a new car
- Emergency and unforeseen medical bills
So as you can see, people go for quick loan options for a variety of personal reasons, so no matter your situation, New Zealand quick loan providers have got you covered.
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Assessment and Finance Ombudsman
Your individual situation is assessed and the loan is provided as per the guidelines by an independent finance ombudsman. This means that you will not receive money that you cannot afford to pay back and that the interest rates are affordable as per your payback plan.
This guarantees getting a good deal at affordable rates, and while it may seem like a lot, the process usually takes 60 minutes to get back to you.
Does my Credit History affect my capacity for receiving loans?
It is a valid thought, given a poor credit history most financial providers won’t touch your case, but that is not the case with personal loans. Since it is powered by local new Zealanders as a community providing short-term loans at competitive rates, your credit history doesn’t really matter, in most cases.
Different loan providers have different limits, but in most cases, you should be able to secure a loan for anything between $1000 – to $20,000. This is ideal for short term needs in situations of urgency as well as to fulfill regular financial obligations.
Can you get the Loan without actually stepping out?
Thanks to technology, many of our everyday transactions have been enabled to the point, where we do not have to leave our premises for most of our purchases. Why should getting a quick loan to be any different?
Payday and short-term loan providers across New Zealand are providing online forms and signature services, where you can simply apply for the loan online and even receive the amount, deposited into your account directly.
What are Pay Day Loans?
Contrary to popular belief, payday loans do not have anything to do with your actual payday. Because of the name, some people tend to believe that you need a steady paycheck to avail pay-day loans, since they are, well, pay-day loans. But it’s not true. This is just a term used for short-term loans and can be availed even if you do not have a job.
Payday loans are usually small loans and unsecured. They may not necessarily be tied to your actual pay-day. The legal status of lending is subject to state laws and have caps to the lending amounts by the state.
What happens if I’m unable to pay back my Pay Day Loan?
Usually, it is not a good idea to default on your payments and you may be included in the defaulter list in case of non-payment. But depending on the area, it may not be a criminal offense and might not even affect your credit history.
Secured vs Un-Secured Personal vs Fixed Interest Loans
Simply put, secured loans are where you provide a guarantee and pledges an asset as backup security against the amount loaned. While on the other hand, unsecured loans do not require that you provide or pledge any assets as security.
The interest rates charged for unsecured loans are usually higher and the amount tends to be on the lower side compared to secured personal loans where you provide collateral, your borrowed amount can be significantly higher than an unsecured loan.
Fixed interest loans also deserve to be mentioned, however, they are not usually considered as quick and short-term. This is the most common form of loans taken out by people, usually against liability or debt, such as mortgages and previous loans.
The term usually ranges from 10 to 30 years and the interest remains the same (fixed) through the period.
What about variable interest loans?
As the name suggests, the payments for debts or liabilities vary, depending on the borrower’s condition. The interest rates on these can go upwards as well as downwards, and such is reflected in your payments as well.
For variable loan agreements, give extra attention to the clauses and know fully well what you are signing up for, to avoid any surprises. If it is possible for you to repay the loan before the agreed timeline, you may also be able to avoid any penalties.
Should I get a line of credit?
Some individuals do consider opening a line of credit. A line of credit is essentially an opportunity offered by banks to individuals to borrow funds, at any given time. Usually, it has a certain limit which is defined by the contract. Think of it as revolving credit. You can consume within the limit at one or more times and is repayable by maturity.
Individuals with bad credit ratings are not eligible for a line of credit for obvious reasons, and also, this is not a great short term solution. For small and short-term needs you are better off getting a personal or a payday loan.
Calculating Personal Loans
Most lenders will offer an online calculator allowing you to check out comfortably design and set up a repayment module according to your needs. To calculate how much, you will need to repay, you will factor in the following things
- How much money do you actually need
- The amount of time you need the money for
- How much can you repay per week and per month
- The interest rates you are willing to pay according to the timeline
Based on these factors, personal loan providers can instantly set up your application online and begin evaluating. This takes less than 60 minutes and they usually get back to you sooner.
The Personal Loan Process
Most personal loans follow a straightforward process once you qualify. To qualify, you have been to be over 18 years of age, with a valid checking bank account and some form of proof of income. Whether you apply online or visit the lenders shop in person, you will be required to provide this documentation to qualify.
Once you have met the qualification criteria, which shouldn’t be a big issue, getting a personal loan is quite simple and easy. If you’re applying online, and you have the required information handy, the complete process will take around 20 minutes. Your evaluation is done and a loan is provided within the guidelines set by an independent finance ombudsman.
It is highly recommended that you read through the terms and conditions and do not skim through them. It is vital you know exactly what is stated, especially in the case of non-payments or payments made after due dates.
You can choose to repay the amount in cash or via online transfer and also be aware of the charges applicable if you choose to extend the date of repayments.
If you are to miss a deadline, you are better off applying for an extension as this will ensure your history with the lender is not affected and you do not have to pay huge late fees.
Some great benefits of Payday Loans are
- Short term personal loans and pay-day loans get a bad rep largely due to the high-interest rates associated with them. Most people who haven’t availed the service only tend to associate negative connotations to quick loans, however, in most cases, it can turn out to be quite beneficial.
- The top benefit without a doubt is, in case of emergencies, quick loan processing times are much faster making it a viable option. It can be quite embarrassing to ask family or friends and it puts them in a tight spot if they do not have the means to help you.
- Professional lenders take the embarrassment totally out of the situation by providing a secure, hassle-free and judgment-free service.
- The other benefit is that Pay Day and quick loans do not impact your credit ratings compared to almost all other short term credit options such as credit card advances, overdrafts and payday loans.
- Payday Loans do not require credit checks, whether you are applying online or in-person. Payday loans will not affect your credit score immediately if you are unable to make timely repayments.
- Compared to credit card advances and bank overdrafts, if you are smart about it, payday loans can turn out to be much cheaper.
Avoid the Trap
A word of advice is to do your financial calculations beforehand and make sure you are able to make the required weekly, bi-weekly or monthly payments. If you are already sure that your expenses do not allow for the repayments, going for a loan is only going to make the problem worse.
It is always a good idea to be smart and diligent when it comes to matters of borrowing money. Rushing such things only gets you into more trouble.
Securing loans is a service to be used in case of emergencies and shortfalls. If you do your due diligence and dig deeper into what you are agreeing to, personal loans and payday loans can provide the much needed financial cushion in times of need.
Getting approvals has become easier compared to old times and in most cases, you’ll find a suitable local lender without any hassles. Initially, do your own assessment and find out exactly how much you need and how you want to breakdown the repayments.
Based on this info, check out websites like quickloans.co.nz where NZ locals can help you get the funds you need. Use their free online calculator and give them a call. You may be eligible for different kinds of loans and the signup and evaluation processes, do not take up much time.
If you’ve read this far, you have developed a fair understanding of the different kinds of loans available in New Zealand. Apart from a few drawbacks that we’ve discussed, getting a loan at the right time does not just make life easier, but they also help you avoid social embarrassment in the time of need. Applying is super easy these days, you can check your eligibility as well as calculate repayment installments and timeline, on the website.