Planning ahead with beneficiary loans NZ

blocks with the word loan spelt out

Are you struggling to finance your existing debt? Perhaps you are constantly robbing Peter to pay Paul and struggling to make ends meet? Beneficiary loans NZ are positioned between traditional banking loans and high interest payday loans. For many people they offer a way out of long-term debt and a way to take back control of their finances. Freedom!

In recent times we have seen a huge increase in demand for beneficiary loans NZ with income secured by the government. Many people automatically assume that short, medium or long-term dependence on benefits excludes them from financial assistance. This is not true. You also have the opportunity to regain control of your finances, consolidate loans into one monthly payment and start planning ahead. No more firefighting and living from day to day!


Taking stock of your debts

While governments around the world have stepped in with financial assistance for those impacted by the COVID pandemic, for many this is not enough. Here at Alternate Finance we appreciate those difficulties, the need to take back control and inject a degree of structure into your finances. As one of the leading lenders in the New Zealand beneficiary loans market, we take our responsibilities very seriously with a commitment to responsible lending. So, whether looking for a short-term loan, perhaps a loan consolidation or advice about the challenges of finance with a damaged credit rating, we can help.

While we are not able to offer bad debt loans, we can offer a range of advice about bringing your debts under control, repairing your credit rating and putting your finances on a much firmer footing.

Women going through her debt in order to apply for a beneficiary loan

Utilising your benefit income stream

At first glance, it is perhaps understandable why many people believe those on benefits will struggle to secure finance. However, if we take a step back and look at this from a distance, how secure are those benefit payments?

Well, in reality these payments are guaranteed by the New Zealand government and therefore access to beneficiary loans NZ is a lot more straightforward than you might expect. If you compare and contrast benefit payments against employment income, you will then be able to understand the issue of security. We know that the next few years will be challenging, unemployment will increase while the economy begins to recover. More and more people will depend on the benefit system in the short to medium-term but this does not mean you can’t take/retain control of your finances.


The hidden impact of debt

The vast majority of us will experience debt in some shape or form, whether this is personal loans, credit cards, utility bills, medical expenses or car loans. There is a general assumption that debt is in some way “bad” when in reality it offers a means to manage your finances – if respected. Unfortunately, we often see those struggling with debts “burying their head in the sand” hoping these issues will solve themselves. This is very rarely the case.

Mental health can suffer when you're living with debt

If left to fester, the pressure of growing debt can (indeed will) have a major impact on:-


Mental health

The stresses and strains associated with high levels of debt can have a serious impact on your mental health. This can cloud your short-term judgement, impact every area of your life and make a difficult situation even worse. The immediate relief once you begin to take back control of your finances is palpable. You can actually start to look ahead, rather than living day-to-day.

Personal relationships

Unfortunately, it is very easy to take out our stresses and strains on those closest to us, our loved ones. The fact that many people try to hide their financial distress, and refuse help from others, can decimate personal relationships. They say a problem shared is a problem halved; this is certainly the case when it comes to financial stress.

Credit rating

The truth is that the sooner you challenge and do something about your debts, the more options available. If you quite simply don’t have enough funds to cover monthly payments, these will eventually catch up with you. Late or missed payments will have an impact on your credit rating, increasing the cost of finance available to you while reducing availability.

Live your life

It is very easy to get into a rut when it comes to debt; with that light at the end of the tunnel seemingly getting further and further away. Constant debt worries will stop you living your life, seeing the world and ultimately relaxing with friends, family and loved ones. A life constantly worrying over debt and where the next payment is coming from is not a life, it is an existence. It’s time to change!


Reality check with your finances

Before looking at beneficiary loans NZ it is important that you review your finances, debts and assets. For many people this will be an unwelcome reality check, a frightening glimpse at the state of your finances but it will allow you to plan ahead. Whatever the status of your finances there is a way forward, there will be a solution and we welcome the opportunity to assist you.

Here at Alternate Finance we offer beneficiary loans NZ starting at $800, traditionally spread over 36 months – although this is open to negotiation. There are a number of issues to take into consideration such as:-

Reality checking your own finances

Total debts

There is no point in hiding any of your debts prior to applying for a beneficiary loan. Everything needs to come out in the open; you need to be upfront with yourself and with us so that we can assist.

Total assets

Many people are surprised to learn that various assets they have acquired over the years can often be used as security. The terms of any financial transaction are based upon the risk/reward ratio. Therefore, the lower the risk of default, in this case with added security, the lower the rate of interest.

Net income

There is often a temptation to use all of your current net income to finance the maximum beneficiary loan NZ. At first glance, this may seem the perfect solution, reducing your debt as quickly as possible and looking forward to a debt free life. However, we strongly advise leaving headroom between your net income and your debt repayments. This should help to cover any unexpected costs in the future without impacting your ability to maintain loan repayments. Fail to prepare, prepare to fail….

Benefit income

Unfortunately, many people feel embarrassed to admit short, medium or long-term dependence on government benefits. However, this is exactly why the benefits system was created; to help those feeling financial distress, help those struggling with debt and reduced income. It is important to look forward rather than backwards.


Securing beneficiary loans NZ

As we touched on above, we are a responsible lender and will only offer affordable loans moulded around your situation. While some loans companies would prefer you to be in debt to them forever and a day, we see ourselves as a stepping stone to financial freedom. There is no benefit to you, our company or our future clients, if we rack up bad debts due to unaffordable loans.

As a consequence, we will strive to secure the appropriate:-

• Monthly payments
• Loan duration
• Interest rate
• Level of security (where applicable)

While we will take into account any assets as security, we also offer loans secured by guarantors. This ensures that in the event that you were to default on your loan repayments, your guarantor would become liable for the outstanding debt. In this scenario, it is important that we make your guarantors aware of their financial responsibilities and liabilities. However, if you do begin to feel financial pressures further down the line, we are always here to help.


Loan adjustments

In a perfect world, you would secure a beneficiary loan based on your benefit income, leaving enough to live off and a little extra in the way of headroom. However, we appreciate that life can change, circumstances can vary and additional financial pressures can emerge. In this scenario, we urge you to contact us as soon as possible if you foresee any future difficulties. We would prefer to discuss the options at the earliest possible opportunity rather than leave it “too late” when the options available have reduced significantly.

There are numerous options available for those who have covered previous payments on time but may be facing some challenges in the future. These options include:-

• Short-term payment holiday
• Refinancing with longer duration/lower monthly repayments

If you do face short-term cash flow problems, perhaps you have school expenses, medical bills, utility bills or rental bonds to cover, this is not the end of the world.


Loan interest rates

Here at Alternate Finance we are able to offer annual interest rates of between 13.95% and 26.98% dependent upon your status. Our minimum beneficiary loan is $800 and in theory the limit will depend upon your net income. These rates compare favourably to payday loans which have attracted more than their fair share of negative press comment in recent years.

At this point it is worth reiterating that the use of assets as security/guarantors can significantly reduce the interest rate on your beneficial loan.

loan interest rates for a beneficiary loan in New Zealand

Conclusion

Unfortunately, many of those struggling with the cost of living and debt repayments are tempted to “put their head in the sand” and hope that everything goes away. This very rarely happens and a deteriorating financial situation can very quickly move from challenging to out of control. The use of finance secured against your benefit income can be a game changer, allowing you to restructure your debts and see a way out of your financial troubles.

The average online application will take less than eight minutes or, if you prefer a chat, we are available on the telephone to discuss your requirements. As a responsible lender, we will be honest, upfront and only offer finance that you can afford.

Mark Benson

Mark previously enjoyed 15 years as a stockbroker/financial adviser and still maintains a strong interest in all things financial. Over the years, he has written about subjects such as property finance, loans, pensions, insurance, stock market investments, tax planning and more. Mark believes it is essential to keep up with the latest financial regulations and adapt your finances accordingly, something he portrays in his financial articles.