Financial difficulty

Expect your lender to:

• Treat you fairly if you miss payments or when problems occur.
• Contact you at a reasonable time to talk about missed payments or if you have exceeded your credit limit.
• Explain your options and work with you to come to an arrangement if you run into financial difficulty. The sooner you get in touch with the lender, the more options you have.
• Explain their financial hardship application process and consider making changes to your loan if you qualify for this (for example if you can’t pay because of something unforeseen, like illness or job loss).
• Provide you with information and help you decide whether to make a change to your loan. Changes like a payment holiday can provide a short-term solution but can cost you more down the track.
• Provide information about financial mentoring services in your area if you have missed a payment or asked for help because you have run into unexpected difficulty repaying your loan.

Be prepared to:

• Get in touch with your lender as soon as possible if you run into difficulty repaying your loan and work with them to come to a repayment arrangement that works for both of you.
• Have your lender get in touch with you if you miss a payment or two. Lenders shouldn’t be letting default fees build up, which could make it harder in the long run to pay off your loan.
• Discuss the reasons for your repayment difficulties with your lender and work out the repayment amount you can afford now, and if or when you might be able to increase repayments again.
• Provide supporting information the lender asks for if you ask for changes to your loan.
• Consider your options if you apply for changes to your loan contract because of difficulty making the repayments, but your lender refuses to make any change. The lender must consider a written application carefully and reasonably, but they don’t have to agree to it. If they decline the application, they must provide a reason why. If you don’t think it’s fair, you can talk to the lender about it or complain to the lender’s dispute resolution scheme if you can’t reach a reasonable outcome with your lender.

Top tips

• Any changes you make to your loan contract (such as reducing the repayments and extending the term) will likely cost you more in the long run. Carefully consider your options and what the overall cost will be if you make these changes.
• If you are struggling to make the repayments, the earlier you speak with your lender, the more options you have. Don’t let outstanding repayments build up before you take action.
• If you think you can’t afford the new repayments, talk it through with your lender, as the new arrangement needs to be fair and reasonable for you, and the lender.
• Consider all your options before making a decision that is right for you. For example, you may be eligible to change your loan contract or apply for a KiwiSaver hardship withdrawal.
• Talk to a financial mentor if you think your ability to repay your loan won’t improve in the near future.