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

 

Gordon Campbell: On Bank Scandals (And Air Crashes)

Last month, the Australian Securities and Investment Commission (ASIC) filed proceedings against Westpac over activities that have some distinct echoes of the Libor scandal. More>>

Budget: Health Funding Must Keep Up With Need

NZNO: “The nursing team has been doing more with less for years. It’s getting to the point that we’re really worried about our colleagues, our patients, our jobs and the level of health care available for people in our country." More>>

ALSO:

Emissions Inventory: Time For The Government To Do The Right Thing

It’s time for the National Government to step up and do the right thing to reduce climate pollution as data shows New Zealand’s greenhouse gas emissions are higher than ever, the Green Party said today. More>>

ALSO:

Budget 2016: More Partnership Schools To Open

Seven new schools will join the eight Partnership Schools already open, along with further new schools opening in 2017. “The growth of this policy is a reflection of the high level of interest from educators and community leaders,” Mr Seymour says. More>>

ALSO:

No Correspondence With English: Did Brownlee Make Up Sale Of Navy Ships ‘On The Hoof?’

Having revealed that several Royal New Zealand Navy vessels have not left port in years, New Zealand First is now asking the Minister of Defence to prove he did not come up with the idea of selling HMNZS Taupo and Pukaki until the media asked him. More>>

Housing Plans: Labour- Abolish Auckland Urban Boundary
The Government should rule out any possibility of an urban growth boundary in Auckland Council’s Unitary Plan if it is serious about fixing the housing crisis. More>>
Greens - State House Solution
The Homes Not Cars policy allows Housing New Zealand to retain its dividend and, in addition, would refund its tax, to spend on the emergency building of around 450 new state houses. More>>

ALSO:

Houses And Taxes: Post-Cabinet, Pre-Budget Press Conference

The Prime Minister said that the pre-budget announcements showed that his Government is “investing in a growing economy”. He re-affirmed the National Government’s commitment to lowering personal tax rates but that any such change must fit with the fiscal reality of the time. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news