Personal loans and credit for temporary workers in New Zealand

What counts as paid employment for a lender

Most application forms ask whether you are in paid work, not whether you hold a permanent contract. Harmoney, an online lender, lists paid employment, which can include self-employment, among its basic requirements, alongside being eighteen or over, a New Zealand citizen, permanent resident or Australian citizen, and having no defaults, judgments or bankruptcies on your credit file.

That wording is helpful for agency workers, but it is only the entry gate. The lender then decides how much it trusts the income to continue and whether repayments fit your budget.

The credit file comes first

In New Zealand, lenders consult credit reporting bureaus, and unpaid bills, defaults or judgments can end an application quickly. Before you apply anywhere, request your own credit report and check it for errors or old entries.

A tidy file is especially valuable when income is irregular, because it is the part of your application you can control completely. Missed payments in the past matter less to some lenders than to others, but expect to be asked.

• Request your credit report from a bureau before applying
• Fix mistakes and settle small overdue accounts if you can
• Avoid applying to many lenders in a short span

Online lenders, building societies and banks

Online lenders such as Harmoney offer personal, debt consolidation, car, wedding and education loans, with a minimum borrowing amount of two thousand dollars and a quote process designed to be quick. Building societies, such as NBS, list personal loans alongside home lending, and tend to value an existing relationship.

Banks and credit unions deserve a quote too. Sorted, the government-backed guidance site, lists personal loans and what you should know before using credit among its guides, and is a neutral place to understand the products before you talk to anyone.

Rates differ widely between lenders, partly because they price the risk of each borrower differently.

Showing steady income from short assignments

Lenders prefer evidence over reassurance. Provide payslips for the last several months, bank statements showing wages, and a note of how long you have worked with your agency or in your field.

If your hours drop in winter or around holidays, say so and show how you coped. A saving habit, even a small one, tells the lender you plan for quieter periods.

Lenders are obliged to check that a loan is suitable and affordable before lending, which is why they ask about your regular expenses. Answer fully and honestly, because an incomplete picture can make a lender decline or, worse, lead you into a loan that does not fit.

Reading the real cost

Look beyond the headline rate. Establishment fees, monthly account fees, early repayment charges and insurance add to the price, and the total dollars over the term is the figure that allows a fair comparison between a short loan and a longer one.

A longer term reduces the instalment but raises total interest. For someone with variable income the better compromise is often a sensible term with the right to repay early, so you can clear the balance in a good month.

Request a disclosure statement and read the part describing what happens if you fall behind.

Debt consolidation: helpful or a trap?

Merging several debts into one personal loan can simplify life and sometimes lower the rate. It can also stretch debts over a longer time, so you pay more in the end, and it does nothing about the habits that created them.

Sorted has a guide on the pros and cons of debt consolidation. Read it before signing, and check whether fees on the new loan cancel out the saving.

If the debts are already out of hand, a free budgeting service may serve you better than another loan.

Warning signs and where to turn

Be cautious with anyone who guarantees approval, asks for money before any loan exists, or pressures you to decide on the spot. Legitimate lenders explain terms, provide documents and give you time.

The Commerce Commission describes itself as the consumer watchdog that enforces fair trading and responsible lending, and its consumer pages explain your rights. If you think a lender has acted unfairly, start there.

If an assignment ends and repayments become difficult, contact the lender straight away. Most are more flexible with someone who calls early.