A payday loan is a short transaction of money usually between $100 and $5000 with a short repayment time, usually when the next paycheck arrives.
Payday loans are advised to be used as a last resort because of the high fees involved. In New Zealand, there are no payday loans regulations, meaning there is no law to protect you from the high fees installed by payday lenders.
Usually, fees start at 1%, but only a few lenders would give you a loan with this low fee. Payday loans do appear on your credit card report, and any further lender can see that you’ve taken a payday loan.
Stick around as we are going to discuss how payday loans work, how to find the best lender and some important information regarding payday loans.
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Source:nzloans.co.nz
How to Find the Best Pay Day Lender
Because there are no financial laws regarding payday loans, the fees from one lender to another could be doubled. In some instances, you can pay $45 for every $100 borrowed. That’s 45% fee!
Doing proper research is advised on finding the best lender for you, and always take into consideration these next few things:
- Always know the exact date of repaying, the longer you repay, the more money you will lose in fees
- Always plan on making a full repayment on time
- Take into consideration the extra fees for late repayment, as well as, interest rates grow
Loaners such as PayDay Advance NZ will usually require you to fill out a form before you can take your loan. These forms have specific requirements that you need to fill out in order to qualify for a loan.
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Source: staticflickr.com
- Living in New Zealand and 18+
- Registered as employed and receive after-tax income above $350 to $400 per week. This information needs to be checked, so expect the lender to contact your employer
- Proof of address from a bank statement or utility bill
- Open bank account
- Mobile phone and email address
- You are viable for a payday loan even if you receive benefits, although, you must meet the minimum weekly thresholds
Fees and Interests Costs
In the case you need to repay back a sum of $500, the interest rates will vary from lender to lender. The more regular repayments you can make the better. Repaying 5 payments of $125 each week is going to lower the fees and interest rates significantly, subsequently relieving you from any further fees. Payday loans NZ usually charge around $40 if you are late for repayment, and some even install 0.25% to 0.5% fee per day until the loan is repaid.
![](https://thefrisky.com/wp-content/uploads/2019/01/Payday-Loans1-730x294.jpg)
Source: cleanforthequeen.co.uk
What if You Can’t Pay?
In the case of you not being able to make a payment, contact your lender ASAP and be honest with him with why you cannot make the payment. Being honest and not hiding gives you the best chances of getting the best outcome possible in that situation. If you’ve found yourself in a situation where the cause is injury, loss of employment, end of a relationship, loss of a family member, or any reasonable cause as to why you cannot make the payment, you can fall under financial hardship with your lender. If you decide to run away from repaying, you will be chased and charged $10 for every letter sent and $500 for a court order.