Make sure you can answer these questions:

  • What is it going to cost you overall?
  • Can you afford it?
  • What repayments will you need to make?
  • What interest or fees will you have to pay?
  • What will happen if you miss a repayment or if you can’t pay the loan back?
  • How long will it take you to pay off the loan?
  • Have you shopped around for the best option?

Shop around

When choosing a loan make sure you do your research and shop around. Lenders must make their interest rates, fees and terms publicly available to help you compare loans and make a decision about which one is right for you.

When you are borrowing money to buy something, remember you don’t have to borrow from the same person who is selling the goods. For example if you are buying a car you don’t have to take out the loan at that car dealership, you could take out the loan from a bank, credit union or other type of lender.

Generally, the higher the annual interest rate the more expensive the loan will be. But you also need to take into account the types of fees the lender charges. Make sure you compare establishment and administration fees.

Once you have considered all these options and if you decide you do need a loan, then shop around for the best option for your situation. The first option you see or know of is not necessarily the best. For example, if you need some time to pay the loan back, then loans designed for short term repayment are unlikely to be suitable for you. Keep in mind, some charities, including The Salvation Army, Good Shepherd NZ and Nga Tangata Microfinance, even offer no-interest loan schemes.

Your lender’s obligations

Your lender must meet a set of ‘lender responsibilities’, this means they must act carefully and responsibly at all times, treat you reasonably and with respect. When signing up for a loan this means lenders must:

  • ask questions to make sure you can afford the loan
  • ask questions to make sure the loan is suitable for you
  • help you understand the key terms of the loan before you sign up
  • ensure the loan is not oppressive and they don’t treat you oppressively.

You will need to provide your lender with information proving that you can afford to repay the loan while still covering your expenses. Collect together the information you need and be ready to answer your lender’s questions. Think about what might happen if something unexpected comes up – will you still be able to pay back the loan?

Lenders must give you key information about the loan including annual interest rates, fees and the total amount you will pay over the life of the loan, before you sign the contract.

Make sure you think about the information your lender gives you before you sign up. You can ask your lender to clarify, take more time to think about it, shop around or get some independent advice.

Read more about signing up to a loan

How can I get independent advice on taking out a loan?

Your lender may recommend that you seek independent legal advice before you agree to take out a loan but you are also entitled to take legal advice or other advice at any time.

Community Law is providing free legal support by phone or online. You can find more information at

If you need independent financial advice to help you to decide whether taking a loan is the right option for you, you can seek help from a financial mentor. There are also a number of other services that can help.

  • MoneyTalks is a free, confidential financial mentoring service which you can access by phone, text, live chat and email. Call them on 0800 345 123, email: or text 4029.
  • The Commission for Financial Capability has some good advice about your money right now. Visit their website. The website has tips, guides and tools to help you work through your money problems. You can also email
  • COVID-19 and borrowing money – for more information see our Q&A for borrowers.

Disputes schemes

If you think your lender has acted unfairly or something goes wrong, you may be able to complain to your lender’s dispute resolution scheme. Your lender is required to be a member of such a scheme.

Dispute resolution is a free way to deal with problems with your lender. If you have a problem with your lender, you must first contact your lender to discuss the problem.

If you are unable to sort it out with your lender, you can then go to their dispute resolution scheme.

When you sign up for a loan, your lender is required to give you information about what to do if you have a problem with your loan or your lender, and how to contact your lender’s dispute resolution scheme.

You can also find out which scheme a lender belongs by checking on the Financial Service Providers Register.

The four dispute schemes in New Zealand are the Banking Ombudsman, Financial Services Complaints Scheme, Fairway Dispute Resolution and Insurance & Financial Services Ombudsman Scheme.

Complaints to the Commerce Commission

If you think a business or person is not complying with one of the laws we enforce, you can make a complaint to us.