What can you expect when you apply for a loan?

When you apply for a loan, the organisation lending you money (“the Lender”) has some responsibilities to you.

The Lender needs to make sure they understand your situation and your needs.

These guidelines are provided for consumers who are borrowing money under a contract governed by the Credit Contracts and Consumer Finance Act 2003.

If you have a complaint about your loan

If talking to your lender doesn’t help, you can make a complaint to the Lender’s independent dispute resolution scheme.

Financial Services Complaints Limited (“FSCL”)

Contact details for FSCL are:
FSCL, P O Box 5967, Wellington 6145
Phone (04) 472 3725 or 0800 347 257
Email info@fscl.org.nz

Understanding Your Needs

The Lender will do everything they can to understand you and your situation, so you can make a good decision about your loan. The Lender must keep all your information confidential. The Lender may need to ask questions about your financial situation.

Depending on your circumstances the lender may ask about your:

• Weekly/Monthly Income and/or benefits (including whether you are in full time, part time or casual employment or receiving a benefit)
• Fixed expenses (such as rent, phone, power any other utility bills, child support, other loans/hire purchases and any monthly or yearly expenses such as insurance)
• Other expenses that come up from time to time (and any special or unusual circumstances that might change your ability to repay a loan)
• Credit history and past defaults (if any)
• Personal circumstances, including your age (especially if you are under 18) and the number of people who are financially dependent on you, your address and how long you have been living there for

The Lender may need to ask you for proof about your financial situation.

Depending on your circumstances proof may include:

• Photo ID (eg Driver’s Licence or Passport)
• Requesting copies of payslips, tax returns and three months worth of bank statements
• Checking in other ways (with other lenders for example, especially if any information or documents provided do not match)

The Lender will do their best to understand your needs and goals.

Depending on circumstances, the Lender may ask about:

• The amount you would like to borrow
• How long the term of your loan will be
• What you require the money for

Deciding if the loan is right for you

The Lender needs to work out whether you are able to repay the loan. The Lender may decide not to give you a loan if they believe that:

• You would not be able to repay the loan
• You would find it extremely hard to repay the loan causing you financial stress
• The type of loan offered will not suit your needs or goals

Making sure you understand

The Lender should make sure you understand the implications of the loan before you sign including:

• Doing their best to make sure you understand everything about your loan, including your rights and responsibilities before you sign a contract
• Provide you with fair terms and conditions
• Clearly explain to you the interest rate and fees
• Make fair decisions about the property being used as security for the loan
• Make sure that the property being used as security on your loan is clearly described in the loan documents and is understood by you
• Make sure you understand the risks that come with having a loan and the result of not repaying it, which might include repossession or the sale of any property you provide as security

How we will help if things go wrong

We know that your situation may change from time to time. If you are having financial difficulty in repaying your loan you should contact the Lender as soon as possible.

The Lender should:

• Treat you fairly if you miss payments. This may include renegotiating the terms of your loan if it is possible to do so
• Work with you to find solutions if you are experiencing financial hardship.
• Discuss your loan with your budget advisor and work with them if you have asked for that
• Assist you should you need to deal with any social service provider (such as Work & Income New Zealand) if you have asked for that.
• Make sure that, if your property has to be repossessed you are treated fairly, remembering that the Lender also has a right to be repaid. Being treated fairly includes:
  • Treat you fairly if you miss payments. This may include renegotiating the terms of your loan if it is possible to do so
  • Work with you to find solutions if you are experiencing financial hardship.
  • Discuss your loan with your budget advisor and work with them if you have asked for that
  • Assist you should you need to deal with any social service provider (such as Work & Income New Zealand) if you have asked for that.
  • Make sure that, if your property has to be repossessed you are treated fairly, remembering that the Lender also has a right to be repaid. Being treated fairly includes: