Before we lend you a single dollar, we need to be confident you can comfortably afford the repayments. That is the heart of responsible lending in New Zealand, and it is the heart of how Alternate Finance does business.
This page explains what an affordability assessment is, why we do one on every loan, what we look at, and what you can do to make the process as quick and smooth as possible.
What is an affordability assessment?
An affordability assessment is a check we carry out before approving any loan to make sure the repayments will fit your budget without causing you financial hardship.
In simple terms, we look at the money coming in, the money going out, and what is realistically left over to cover loan repayments. If a loan would leave you short on essentials like rent, food, power, or transport, we will not approve it. That is true even if you really want the loan and even if you have plenty of security to offer.
It is the same kind of check a good friend would do for you on a serviette before you signed up to anything. We just do it a bit more formally, and we keep proper records.
Why we do an affordability assessment on every application
Three reasons.
First, it is the law. In New Zealand, all consumer lenders must comply with the Credit Contracts and Consumer Finance Act 2003 (CCCFA) and the Responsible Lending Code. Lenders are required to make reasonable inquiries before lending so they can be satisfied that the borrower will be able to make the payments without suffering substantial hardship.
Second, it is the right thing to do. Lending money to someone who cannot afford to pay it back is not a favour. It is the start of stress, default fees, and a worse credit record. We would rather lend you a smaller amount, or a different product, or no loan at all, than set you up to fail.
Third, it protects everyone. A properly assessed loan is more likely to be paid back on time, which keeps interest rates competitive and our service running for the next person who needs us.
What we look at when we assess your application
Our assessment is built around four simple questions.
1. How much do you earn?
We need to understand your regular income. That includes wages or salary, self-employed income, government benefits, superannuation, child support, rental income, or any other regular money coming in.
We will usually ask for recent payslips, bank statements, or a benefit summary so we can verify the income you have told us about. Verification does not have to be painful, just clear and honest.
2. What are your regular expenses?
We then look at the money going out. That covers things like:
• Rent or mortgage payments
• Power, water, internet, and phone
• Food and groceries
• Transport, petrol, and vehicle costs
• Insurance premiums
• Childcare, school costs, and child support
• Existing loan, hire purchase, or buy-now-pay-later repayments
• Any other regular financial commitments
We are not trying to dictate how you spend your money. We just need a realistic picture so the loan repayment fits in around your real life, not a theoretical version of it.
3. What other debts do you have?
Existing debts matter because they reduce the income left over each week. We will run a credit check, look at any outstanding credit cards, personal loans, hire purchases, or buy-now-pay-later arrangements, and factor those repayments into the calculation.
A bad credit history is not an automatic decline at Alternate Finance. We look at the full picture, including security and current income. But we do need to know what is already on your plate.
4. Are your circumstances likely to change?
We also think a little about the future. Are you on a fixed-term contract that ends soon? Is there a baby on the way? Are you about to retire? These things do not stop a loan, but they help us match the loan term and repayment amount to your situation, so the loan still works for you a year or two from now.
How the affordability calculation works
Once we have a clear picture of your income, expenses, and existing debts, the calculation is straightforward:
Income, minus essential expenses, minus existing debt repayments, equals your available funds.
The proposed loan repayment needs to sit comfortably inside those available funds, with a sensible buffer for unexpected costs. If it does not, we will look at options. That could mean a smaller loan, a longer term, a different repayment frequency, or in some cases, a different product altogether.
What you can do to help
A few simple steps make the assessment quicker and the result more accurate:
• Be honest about your income and expenses. Underestimating your costs to qualify for a bigger loan does not help anyone, and we will usually spot it on your bank statements anyway.
• Have your documents ready. Recent payslips, three months of bank statements, and proof of ID and address are the usual starting point.
• List your existing debts clearly. Include the lender, the balance, and the regular repayment amount.
• Tell us about any upcoming changes. A new job, a move, or a change in family situation is useful context.
• Ask questions. If anything in our process is unclear, please get in touch. We would rather slow down for a minute than have you sign something you do not fully understand.
What happens if a loan is not affordable for you
If our assessment shows the loan you have applied for would put you under financial pressure, we will not approve it as it stands. That is not us being difficult, it is us being responsible.
We will usually come back with options. That might be:
• A lower loan amount that still helps with the immediate need
• A longer term that brings the regular repayment down
• A debt consolidation loan that combines existing debts into a single, simpler payment
• A suggestion to chat with a free budget advisor, such as MoneyTalks, before going any further
Whatever the outcome, we will explain it clearly and treat you with respect.
Our commitment to responsible lending
Alternate Finance is a New Zealand lender, and we lend in accordance with the Credit Contracts and Consumer Finance Act 2003 and the Responsible Lending Code. That means:
• We make reasonable inquiries before lending, every time
• We keep proper records of how we assessed each loan
• We are transparent about interest rates, fees, and total cost of borrowing
• We offer hardship support if your circumstances change during the loan term
• We never pressure anyone to borrow more than they can afford
If you ever feel you have not been treated fairly, you can raise it with us first. If we cannot resolve it together, we are a member of an approved independent dispute resolution scheme, which gives you a free, independent path to having any concern looked at properly.
Like us to call you back ?
Ready to apply?
Our online application takes around 8 minutes to complete. Once you have submitted it, we will run our affordability assessment and aim to come back to you with an answer the same business day. If approved, the funds can usually be in your account within 24 hours.
If you have any questions before applying, or you are not sure whether your situation will fit our criteria, please get in touch. We would much rather have a quick chat than have you wonder.
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