Loans in New Zealand

Making Sure You’re Ready for a Loan

You might be about to apply for a loan and if you are, you need your finances to be in good shape. This might seem a bit of a contradiction, because if your finances were already alright, you wouldn’t be applying for a loan, right? Well, no. A loan is an amount of money that you don’t have to hand right now, even if you’re earning a decent amount and you’re a careful spender.

You have to be ready to take on a loan

These days it’s staggeringly easy to apply for personal finance, with online loan providers all over the world now. If you’re in Christchurch or in Auckland loans can be arranged in person in your nearest bank, but if you’re a bit more remote then a 100% online option like Need Cash Today is much more convenient.

Just because you applying loan online doesn’t mean you’re guaranteed to be approved and it certainly doesn’t mean you can default, either. Online finance is just as real as if you’d sat sweating through a grilling by your bank manager. So, here’s how to get ready to pay off your loan.

Make sure you can afford it before you apply

Use a loan calculator to work out how much you’ll be paying each month according to your amount, the duration of the loan and your APR (which will vary according to your credit rating). If you can’t afford a particular amount, then reduce it and see if you can make up the amount you need by overtime or saving up harder.

Cut back on non-essentials

You should do this as soon as you know you’ll be applying for a loan. This will help you to make the payment each month and it may create a buffer just in case you have difficulty one month. Unless you’re near the end of the loan, don’t be tempted to spend this buffer on an overpayment because you’ll still need to make next month’s payment as usual.

You can make small monthly overpayments

If the creditor allows it, you should make a few small overpayments if you can. Don’t dip into your buffer, though. Just a few dollars each month could mean your final payment is tiny, so effectively you’ve paid the loan off a month or so early without incurring early repayment charges.

Choose the shortest term you can afford

It might be tempting to choose a longer term so that your monthly payments are lower, but you’ll be paying more interest in the long run. Don’t choose a term that’s too short, though, as you may end up struggling to make the payments and, even worse, end up defaulting, which will really hit your credit rating.