A guide to borrowing money

Do you know what to look for in a loan contract?

Do you know what fees you’re expected to pay?

If you run into financial difficulties do you know how your lender can help?

What you really need to know when borrowing money

• Before applying for a loan, ask your lender about their application process and how long it could take. Don’t leave borrowing to the last minute, especially if you’re in a hurry.
• Lenders will ask detailed questions about your income and expenses. If you want to save time, come prepared with a detailed budget, showing all the money you earn, the expenses and outgoings you have, and any savings you make. The budgeting tool on www.sorted.org.nz can help with this.
• Lenders must help you understand the loan contract, such as what you’ll owe, what happens if you miss a payment or two, run into hardship or if something goes wrong and you can’t pay at all.
• If you’re struggling to make the loan repayments, talk to your lender as soon as possible. The earlier you talk to your lender the more options you’ll have. Lenders should try to work with you to find solutions when financial trouble strikes. Any solution should be fair to you and the lender.
• Financial mentoring services provide free help with money management and debt related problems. Financial mentors can even work with the lender on your behalf. To find a financial mentoring service near you, check out www.fincap.org.nz or call Money Talks on 0800 345 123.

You have a lot of rights when it comes to getting credit and paying off a loan. It really pays to know what they are, so if things don’t go as planned, you know what to do.