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How To Get Loans In New Zealand
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If you want to know more about the intricacies of loan applications, then this article is for you. Below are frequently asked questions about loans by New Zealanders
If you want to know more about the intricacies of loan applications, then this article is for you. Below are frequently asked questions about loans by New Zealanders
What agencies give out loans?
Agencies that give out loans include traditional financial institutions (e.g., banks), peer-to-peer loan platforms. These platforms operate online and give cheaper interest rates to individuals with good credit scores. They operate online only. Examples include Lending Crowd, Harmoney, and Simplify.
What are the types of loans I can get in New Zealand?
There are various types of loans offered by different lending institutions. The popular ones include personal loans, student loans, mortgage loans, car loans, and business loans.
How do these loans differ?
These loans all have their different purposes. Personal loans can be used for anything you want, student loans for students to settle tuition fees, mortgage loans for paying house rents or buying a house, business loans to fund your business, and car loans are meant for making car payments or buying a car.
What are the factors that determine the successful approval of these loans?
Each loan has different factors affecting their approval. However, one constant factor is your credit score. Your credit score is not only used for taking loans but also for any type of credit at all (e.g., phone contracts, insurance, bank accounts application, etc.).
For the sake of these articles, we’ll be considering there types of loans: Business loans, personal loans, and debt consolidation loans. Let’s start by defining the three:
Personal loans are loans that you take for your personal use. You borrow an amount to be paid back over a fixed period (ranging from 2-5 years) with a fixed interest rate. This type of loan depends on your credit score, saving levels, and personal income.
Business loans, on the other hand, are taken either to purchase a particular asset or to fund a business contract. The rates on business loss are higher than personal loans due to the higher amount that can be borrowed. The factors considered for business loans include your personal credit score, business account records, cash flow, and list of debtors for your business, among other things.
Business loans and personal loans both have the same classifications, namely: Secured and unsecured loans. Secured loans are loans that have collateral which the lender can repossess in case the loan cannot be repaid. Unsecured loans do not have collateral and come with higher interest rates due to a higher risk to the lender.
What are debt consolidation loans? They are loans that help to place your high-interest loans under a single low-interest loan plan. This is an easier way to settle your loans if you have quite a few of them. One popular way of doing this is to apply for a balance transfer credit card.
Now, let’s discuss how to get a good credit score rating as it is crucial for any kind of loan.
• Pay your loans when due and do not default on any payment
• Try to file for a hardship application if any situation comes up in which you’re unable to pay your loans (e.g., getting laid off at work)
• You can request your credit history from the credit reference agencies. The ones operating in New Zealand are Centrix, Equifax, and Illion (previously known as Dun & Bradstreet). You can co through to endure every information is correct as your credit history influences your credit score.
You should also know that some organizations give loans to people with poor credit scores, but they charge higher interest rates.
Understanding these factors will give you a better chance of getting your loan approved. However, always remember this: borrow only what you can return!
