If you live in NZ and are currently looking to take out a personal loan, then you’re in luck. From banks to Credit Unions and everything in between, Kiwis like you are spoiled for choice when it comes to choosing a provider.
A wealth of choices is great for you, as it invites competition and even more competitive rates. But it also comes at a cost: time. Finding enough time to compare all of your options can be difficult, but it’s something you’ll want to do. Why? Because no matter how big or small the borrowing is, it is a critical financial decision that shouldn’t be made lightly.
Pick the right provider, and you’ll be jetting off on your holiday, consolidating some of your debts or rolling around in a new set of wheels in next to no time. Choose poorly, though, and you could be dealing with unforeseen consequences.
You need to choose the right loan, for the right amount, from the right provider.
But how do you know which is which? When making your decision, consider the following factors:
It helps to stay informed, so make a list of the New Zealand providers available to you. Many providers also now offer online loan application forms, so you don’t have to limit yourself to local providers.
Keep in mind that the bigger the list, the better the chance you’ll find a provider that’s right for you. When you’re writing this list, don’t forget to consider the following:
The lower the interest rate, the less you’ll pay over the life of the loan. It’s that simple. What’s less simple is that every provider will offer varying rates depending on the type (unsecured or secured) and size of the borrowing.
The easiest way to compare interest rates is via the provider’s personal loan calculator, or to check interest rates online at interest.co.nz.
Slick advertising and low interest rates are often used to draw you in, so before you sign on the dotted line check the fine print. Hidden closing fees, commissions or late charges all add up.
Some providers, for example, charge for changing the repayment terms, while others will hit you with additional fees and charges if you miss a payment. If these are rolled in, you’ll also end up paying interest on them, too.
Keep this in mind when comparing providers. Great rates don’t count for much if the provider makes their money back in hidden costs, so check their rates as well as fees and charges. If it sounds too good to be true, it often is.
Terms and conditions cover everything from the payment period, due date, as well as early or lump-sum payments. The exact payment period that’s best for you depends on your own financial circumstances, and your capacity to pay, so look for a provider that best matches your needs.
Similarly, check if you’re able to make lump-sum payments towards your loan or pay it off early. A bonus, rebate or extra cash might let you make those early payments, but some providers may charge early exit fees.
If in doubt, always ask for clarification from a finance provider. Shoot them an email, pick up the phone or sit down with them and discuss how long the process will take, what they offer, as well as any other specifics you want to know about.