Beverley*, a 64-year old super annuitant, was referred to BudgetFirst in Hastings, because she needed to do a budget for the Social Housing register.
“Normally it’s a simple appointment,” says Teresa, her Financial Mentor, “but I try to make a habit of asking people about any high-interest loans to see if they might qualify for an interest-free loan from Ngā Tāngata Microfinance (NTM). I remember asking Beverley about a small loan she had with the finance company.”
Beverley had needed to buy a car, and the finance company said they could offer her a loan of $700. “I asked her if they checked her incoming versus outgoing costs and she confirmed ‘yes’, but she was receiving winter energy payments at the time,” says Teresa.
Unfortunately, on a very limited income, Beverley never managed to make one repayment off the loan, as the payments were due before her WINZ payments hit her bank account. A debt collector from the finance company visited her, and she signed a WINZ redirection form; however, it was declined.
Teresa was shocked to find that the loan had an exorbitant interest rate of 30%. Not only that, the finance company had charged Beverley a $15 fee every time she defaulted on a payment, a warning notice fee of $20, a default notice fee of $45, as well as two field visits at $125 each.
Over the short life of the loan so far, these fees had significantly driven up her debt. When she saw the Financial Mentor, she owed $1172.88 on a $700 loan! “She should never should have been given this loan in the first place,” says Teresa.
Beverley says the stress of the loan was unbearable. “I couldn’t keep up with the repayments and didn’t know what to do,” she said. Fortunately, Teresa was able to help her by applying for one of NTM’s GetControl debt relief loans, which are interest-free and fee-free and designed to help people on low incomes, just like Beverley.
The application was accepted, the high-interest loan was repaid, and Beverley is now repaying NTM at a manageable $15 per week. What’s more, with the decreased loan repayments and no interest, Beverley had an extra $15 in her budget each week, which enabled her to afford more food and household essentials.
“The loan caused me so much more stress that it was worth, and I’ve learnt my lesson,” she says. She plans to continue working with her financial mentor to keep on track with money, especially now she has a budget and Teresa to guide her.
Note: all names including those of the loan companies have been changed. Any re-publishing of these case studies need the permission of Ngā Tāngata Microfinance Ltd.