Archive:

Danny* had to give up work some years ago on advice from his doctor, because the solvents that were part of his work environment were causing him significant health issues. Unfortunately, before he left his job, he didn’t have enough time to pay off a couple of debts - a credit card and a finance company loan. His damaged health meant he couldn’t find other paid employment and suddenly had to cope with a major change in lifestyle. Now on a welfare benefit, Danny was only able to make the minimum required payments on his loans, so he made little progress in reducing his debts over the next couple of years. For Danny, this created huge anxiety which added further stress to his health issues, as he couldn’t see any way out of his situation. Work and Income helped by giving Danny Temporary Additional Support (TAS) to help him meet his debt commitments. However, even though Danny religiously made each repayment, spiralling interest rates meant he simply couldn’t free himself from the debts. Danny started seeing a financial mentor, who applied for a Debt Relief loan from Ngā Tāngata Microfinance and the application was approved. Because the loan has no...

Denise* purchased a car through a $10,000 loan, which soon became a nightmare. Not long after the purchase, the loan was converted into an Acme Loans Company* loan, picking up additional security in the contract without Denise’s knowledge or agreement. The interest rate on the loan was 24%, charged and added weekly to ensure maximum compounding interest. On top of that, an administration fee of $5 per week was also charged weekly. The monthly interest was $200, the administration fee $20 per month and monthly repayment $260 – which meant only $10 per week was actually going toward paying off the principal. Penalties were an additional 12% plus a $5.77 default fee, all compounded weekly. Denise hadn’t had the car for that long when it broke down. Denise had little incentive to keep paying off a debt that wasn’t reducing and the car was repossessed a few months later and then sold. During this time, further fees were added, including a tracing fee, phone calls and service fees. When the car broke down, Denise’s debt was $11,000 - by the time it was sold less than three months later, the debt had ballooned to a whopping $14,000 (including a $500...

Things were really tough for Peter* when he started seeing a financial mentor. A super annuitant with high needs, Peter was getting food parcels and receiving help to visit Work and Income due to his high hardship levels. His financial mentor helped him to access Work and Income funding to pay for an ambulance callout when he became ill, and to pay for his car repairs and registration. However, Peter’s greatest, and most stressful, issue was a $15,000 debt with a bank. Peter had been employed in reasonably good paying jobs during his working life, yet somehow he had ended up with a large debt in retirement with no assets - and was living in a Housing NZ house. His financial mentor continued to work alongside Peter, showing him how to better manage his money. She recommended that Peter file for bankruptcy, which eliminated his largest debt, plus she helped him sort his insurance policies. She also helped Peter apply for a GetControl Debt Relief loan from Ngā Tāngata Microfinance to eliminate the remaining debt, a car loan. Unlike most loans, the GetControl loan is safe, fair and affordable - with no interest or fees, meaning Peter could pay the...

Julia* and her partner, Shane*, have family in New Zealand, and Julia’s parents are in Samoa. Their financial mentor already knew Julia’s relatives, who were frequent users of high-interest credit. Julia appeared to falling into the same trap. She was also tangled up in her relative’s loans when she felt pressured to be one of two guarantors for a loan to repair a vehicle so her nieces and nephews could get to school. A loans company had pressured four people to be guarantors of the loan, including Julia and Shane, as well as her uncle and aunt who owned the vehicle. Julia already had $4,000 debt with two other finance companies, yet the loan company managed to convince Julia to make that debt part of an overall $23,000 loan to them. The uncle and aunt also had an existing debt of approximately $15,000 with the same loan company. The family was deeply in debt, yet fixing the van only needed $2,000. The loans company were gaining money from acquiring the existing debts, as well as interest on the set-up cost - plus the interest rate was higher than the previous loans. Julia and her partner’s car became part of the...

Commerce Commission media release reporting the closing down of a lender for charging borrowers unreasonable fees and excess interest.

Jendy* was seeing a financial mentor in South Auckland, because she was unwell and was sole caregiver to two children. Jendy had received a benefit when she went into hospital care, which resulted in missed payments with a finance company. The finance company started repossession action, which increased Jendy’s anxiety and a resultant heart attack put her back into hospital. There were also other stressful events happening in her household at the same time. Her financial mentor helped Jendy to explain her difficult circumstances from the hospital and the finance company stopped the repossession action. He then helped her to obtain an interest-free GetControl Debt Relief loan from Ngā Tāngata Microfinance. Jendy paid back $14 per week, for two years, and has now finished paying off the loan. Jendy says she has not taken on any more debt since she received the loan from Ngā Tāngata Microfinance. When asked what would have happened if she had not got the loan, her comment was “my head would have been in a bad place. I would have got unwell again.” She says that “things have been much better” since then. Her financial mentor told her she now has good credit with Ngā...

A short interview with Radio NZ Checkpoint.

Moana’s* nine-year old daughter, Tina*, had hearing difficulties so had a teaching aide to assist her at school. An unfortunate negative effect of this assistance was that it undermined Tina’s confidence and reduced her desire to become more independent. To qualify for subsidised hearing equipment that would improve Tina’s independence, a hearing assessment was suggested - but the cost of the assessment was beyond Moana’s means. Luckily, Moana’s was already working with a financial mentor, who helped her apply for an interest-free loan from Ngā Tāngata Microfinance. The application was complex because Moana is engaged with multiple support organisations - she receives help from the school, as well as from Social Workers in Schools (SWiS) and her whānau. Her SWiS social worker had applied to a Trust for assistance with this matter, but hadn’t heard back in time for the final hearing assessment payment. When Ngā Tāngata Microfinance was certain that Moana was accessing all the state-funded support that was available to her, a GetAhead Asset Building loan was approved to pay for the cost of the hearing assessment. Moana says that having an interest-free loan that she can pay off in small, manageable payments has been really “empowering” and...

Dean* had been seeing a financial mentor for a number of years, because he was living on the unemployment benefit and was unable to make ends meet. Dean and his partner were using the equity in their home to cope with the shortfalls in their budget, and needed to get out of this cycle as he was effectively ‘borrowing from his future’. Dean was looking for ways to increase his income so he could seek work in another city. He decided to do this through improvements to his home, so he could rent out a room. This would increase his income, as well as making it possible to relocate elsewhere to find work if necessary. Dean’s financial mentor sat down with him and helped him create an accurate budget, which proved very valuable for Dean’s long-term financial planning. He also helped him apply for an interest-free GetAhead Asset Building Loan from Ngā Tāngata Microfinance, so that he could pay off the renovations over a period of two years. After receiving the GetAhead loan, Dean struggled financially at first, as the renovated room took much longer than anticipated to complete. However, within a few months, he was starting to get ahead...

Ngā Tāngata Microfinance Trust has made a submission to the Consumer Commission on Consumer Credit Fees Guidelines.