Getting a loan

Expect your lender to:

• Ask you why you want the loan, how much you want and for how long, to make sure they give you a loan that best meets your needs.
• Make a detailed assessment of your ability to repay the new loan and continue to meet financial commitments and lifestyle expenses you can’t or don’t want to give up.
• Gather recent and reliable information and documents from you to make their assessment and ask about known circumstances that might affect your income after you get the loan.
• Build an accurate budget, using your income, expenses and savings information, to cover a 12-month period, or the term of your loan if it’s less than 12 months.
• Get a credit report with your credit score.
• Make sure that your income exceeds your expenses and that you have some money left over after each loan repayment.
• Let you know whether you need a person who will pay your debt if you are unable to pay (a guarantor). Your lender will then assess if the guarantor is able to pay your debt by following the same kind of process that they followed for you as the borrower.

Be prepared to:

• Provide a detailed budget of your income and expenses. Have this pre-prepared if you want to save time.
• Provide supporting documents the lender asks for, such as the last 90 days of your bank statements.
• Answer questions about why you need or want the loan, your income, expenses, and personal circumstances, including anything you know about that might reduce your income after you get the loan, like being on a short-term job contract.
• Have your lender confirm some of the information you provide.
• If necessary, talk with your lender about whether you are willing to stop or reduce some non-essential purchases, so you can afford the new loan payments and they do not cause financial hardship.

Top tips

• Get in touch with your lender before you need to borrow money to find out what you need to do, what documents you need to provide, and how long it could take for the loan to be approved. Don’t leave it to the last minute, especially if you are in a hurry.
• Check out the Sorted website for tools, such as a budgeting tool to help you prepare: www.sorted.org.nz.

You can read more about what to look for when getting a loan and what is consumer credit on our website. There is also a checklist of things you can do before applying for a loan on www.consumerprotection.govt.nz.