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

Greens: Russel Norman To Stand Down As Co-Leader

Green Party Co-leader Dr Russel Norman has announced today that he will stand down as leader at the party’s Annual General Meeting in May. Dr Norman will remain as Co-leader and retain his finance and climate change portfolios until the AGM.

“After nearly a decade as Co-leader, now is a good time to find a new challenge for myself, and to spend more time with my family” said Dr Norman.

“This is my ninth year as Co-leader and I think it’s time for a change. Now is a good time for new leadership for the Party. My replacement will start from a strengthened base and will have a full parliamentary term to establish himself in the role and take the Greens into government in 2017." More>>

 

Gordon Campbell: On The Eleanor Catton Rumpus

If anyone was in doubt about the accuracy of the comments made in India by Eleanor Catton, the reaction from some quarters here at home has gone a long way to proving her point… More>>

ALSO:

More Rent Assistance, Less State-Owned Housing: John Key Speech - Next Steps In Social Housing

"We are going to ensure that more people get into social housing over the next three years, whether that is run by Housing New Zealand or a community provider. The social housing budget provides for around 62,000 income-related rent subsidies a year. We are committed to increasing that to around 65,000 subsidies by 2017/18, which will cost an extra $40 million a year." More>>

ALSO:

The Future Of Work: Andrew Little - State Of The Nation 2015

In 2005 when I led the EPMU we worked together with Air New Zealand to find a way to keep engineering jobs that were heading overseas. A lot of these workers were people I’d known for years and they were facing not just losing their jobs but not being able to find the kind of work they do without going overseas. A lot of people were facing personal and financial upheaval.... More>>

ALSO:

Gordon Campbell: On The Sabin Case, The Pressures On Greece And (Songs About) Coyotes

Mike Sabin is a National MP, and the current chairman of Parliament’s law and order committee. Yet reportedly, he is being investigated by the Police over an assault complaint... However, the PM will not comment on any aspect of the story. More>>

ALSO:

Houses, ISIS, King (& Catton): PM Post-Cabinet Press Conference

The Prime Minister met with reporters to discuss: • Social housing, the Auckland housing market • The prospect of joining international forces to combat ISIS • David Bain’s compensation • The lowering of the flag for the King of Saudi Arabia's death ... More>>

ALSO:

Gordon Campbell: On Tomorrow’s Speeches By John Key And Andrew Little

The Key government has already kicked off the political year on a stridently ideological note, with Environment Minister Nick Smith choosing to lay all manner of sins at the door of the RMA. Tomorrow, the government will wheeling out its best salesman – Prime Minister John Key – to sell its plans for state housing… . More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news