Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 


Responsible lending too taxing for some

15 August 2014

Responsible lending too taxing for some

In July a ‘responsible lending’ discussion paper was released which will help introduce changes to the New Zealand credit legislation. Within days, Napier Family Centre (NFC) received a visit from one woman whose loan agreement with a local lender made us wonder how some lenders view their responsibility.

“Young, free and single, this woman’s life could have easily been turned upside down by some ill-thought out lending. The loan for a relatively small $13,500, before fees, resulted in the client’s mother needing to act as guarantor and secure her house against the loan,” Says NFC spokesperson Suzanne Stewart.

“A loan for such a small amount held against a $215,000 house is excessive,” she says. “Why didn’t they use a car as collateral instead?”

“What was even more concerning to us was that the client would have been left with just $75 per week after rent and the $109 loan repayment to fund food, petrol, power, car and other expenses. That isn’t affordable and the loan company would have known that.”

In addition the loan agreement included some Work and Income debts and court fines which didn’t incur interest until they were amalgamated into the new loan agreement. “That isn’t sensible and this lender acted irresponsibly” Suzanne says.

Under the new legislation lenders have a responsibility to the borrower that, in essence, means they can only structure a loan one can afford to repay.

“That means asking about the borrower’s income, expenses, credit history and personal circumstances,” says Suzanne. “In this situation the client was not asked to provide any information of a budget, what she paid in rent, or for essential proof of her financial situation. This happens all too often”.

Because NFC Budgeting Services became involved before the grace period of three days lapsed a phone call and email put a stop to this loan.

Had the budgeting services team not got involved at the early stage, the borrower would have been liable for $28,340 after interest, over the five year term of the loan plus hefty penalties had she not met the repayments.

Now a happier client has a much more manageable $46 per fortnight agreement in place. With a new and better structured loan through an alternative lender. NFC Budgeting Service is pleased with the outcome.

“Our advice to anyone in a situation where they are thinking of consolidating debts or taking out a loan that sounds too good to be true is…it probably is!” “We recommend talking to a budget advisor first, our services are free, confidential and non-judgmental, so please use them.”

About Napier Family Centre
Napier Family Centre is a not for profit community based, social service agency founded on inter-church leadership. Our commitment is to provide competent professional services in a wide range of areas to help families in our communities. Our trained budget advisors offer individuals and families free, confidential, non-judgmental advice and support, help with planning a budget and living within an income, negotiations with creditors as required, support in developing good money management skills and more. Napier Family Centre budgeting service is an accredited member of the NZ Federation of Family Budgeting Services (NZFFBS). Budget advisors are certificated under NZFFBS.

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Greek Riddles:
Gordon Campbell On The Recent Smackdown Over Greece

There had been a fortnight of fevered buildup. Yet here we are in the aftermath of the February 28 showdown between the new Syriza government in Greece and the European Union “troika” and… no-one seems entirely sure what happened. Did the asteroid miss Earth?

It seems to have. The EU still exists. Syriza is now claiming a victory of sorts. It doesn’t help that the only people who do appear to be sure (the Greeks buckled) are claiming the exact opposite to what the other group (the Greeks won!) are saying. Plus, there are bets either way e.g. Bloomberg News: “Its too early to say who caved in to whom.” More>>

 

PARLIAMENT TODAY:

Iraq: Ex-Hostage Says Government Not Putting NZers, Iraqis First

Harmeet Singh Sooden is travelling to Iraq in the coming weeks to work with Christian Peacemaker Teams (CPT) on a short-term assignment. More>>

ALSO:

Joint Statement: Australia-New Zealand Leaders’ Meeting

Prime Minister Key warmly welcomed Prime Minister Abbott and Mrs Abbott to New Zealand. The visit has enabled wide-ranging and substantive discussion that has underlined the strength, value, diversity and warmth of our trans-Tasman relationship. More>>

ALSO:

Press Conference: Peters To Stand In Northland By-Election

New Zealand First Leader Winston Peters has announced his intention to stand in the Northland by-election, citing his own links to the electorate and ongoing neglect of the region by central government. More>>

ALSO:

Gordon Campbell: On The Wage Hike For MPs (and Paul Robeson)

Hard to tell what is more infuriating. Is it the 5.3% increase on the already bloated salaries of MPs, or their pantomime of outrage at being gifted with such a wonderful back-dated bonanza? More>>

ALSO:

No Designers Or Visual Artists: Flag Panel Members Announced

The Government has appointed 12 New Zealanders as members of the Flag Consideration Panel which will engage with the public about a possible new New Zealand flag, Deputy Prime Minister Bill English says. More>>

ALSO:

Labour MP Stands Down From Portfolio: Comment From Carmel Sepuloni

The first I knew of my mother’s charges was when I was called by a reporter yesterday. I spoke to Andrew and we agreed there is a conflict of interest at the present time which means I will temporarily stand aside from the Social Development portfolio. It’s the right thing to do… . More>>

ALSO:

Gordon Campbell: On Whether NZ Troops Are The Least Of Islamic State’s Problems

Given that it has been politically packaged and sold as a training mission, the Iraq deployment announced yesterday by Prime Minister John Key seemed to be mysteriously short of actual trainers... The other wing of the argument is whether a troop deployment is (a) the only effective way and (b) the appropriate time to combat Islamic State. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news