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Compare a range of short-term loan lenders and learn more about the options available to borrowers.
⚠️ Warning: Be cautious with short-term loans
If you're experiencing financial hardship and would like to speak to someone for free financial counselling, you can call the MoneyTalks helpline operated by FinCap on 0800 345 123. It is open from 8am to 5pm, Monday to Friday, and 10am to 2pm Saturday. When comparing short-term loans, ensure you take into consideration any fees, charges and rates you may be charged.
Alternatives to short-term loans
Consider these alternatives before applying for a payday loan:
- Use online Government resources. The Commerce Commission New Zealand website explains how loans work and what to be aware of when borrowing from a lender.
- Payment plans. Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan or receive an extension on your due date if you’re behind on payments.
- Contact your creditors. Speak with creditors about extending the due date of your payment, or working out a new payment plan that works for both of you. Seek personal loans elsewhere. Consider a small personal loan from a bank or a credit union. You may qualify for a loan with much lower interest rates than those offered by payday loan companies.
- Pay with credit card. Consider paying with your credit card to cover your emergency bills or payments. This is not a long-term solution, as you’ll need to pay off the balance as soon as possible, but it’s an alternative to a short-term loan with high – and immediate – interest rates.
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What is a payday loan?
Payday loans are a short-term finance product designed for borrowers to repay in line with their pay frequency (hence the name), so the loan can be repaid every week, fortnightly or monthly.
The amount you can borrow is typically between $300 and $2,000 for a period of 2 days to 6 months, or if you want to borrow $5,000 you may have up to 1 year to repay it. The time it takes to receive approval is relatively quick, and may even be within the hour. This means if you are in need of the money quickly, there are lenders that can help.
Please be aware that payday loans usually come with a shorter loan term and higher interest and fees, so you need to ensure that you can comfortably repay the loan amount.
What if I can’t repay a loan?
If you don’t make repayments on time, you are in default and the loan provider charges you a fee. Any defaults are also listed on your credit report as a negative mark and may be there for up to 7 years. If you have a loan and are not sure if you can make the repayments, see Finder’s guide for tips on what to do next.
Only apply for a loan that aligns with your budget and is within your capability to repay. If you have any doubts about your ability to meet the loan repayments, you should consider other options and not apply for the loan.
Risks of payday loans
There are several risks when it comes to taking out a payday loan. In general, try to avoid taking out a payday loan if you aren’t certain that you can pay it back. Downsides to payday loans include the following:
- High default fees. The biggest pitfall of taking out a payday loan is that if you can’t repay it on time, the lender will likely charge you additional fees in addition to the interest you owe. These costs could increase the amount of money you must repay the lender and cause financial difficulties.
- The debt cycle. If you have difficulty making a repayment, it might be tempting to borrow more money to pay off your loan. This becomes a cycle of debt that can be very difficult to escape from.
- High-interest rates. Payday loans typically have much higher annual interest rates than other types of loans.
- Direct debit risks. Many payday lenders require you to make repayments via direct debit on your next payday. Unlike other loan types, payday loans cannot typically be repaid in small instalments. If you need the money from your next pay cheque to pay for rent or other expenses, you could be left short.
- Credit rating impact. If you can’t repay your loan on time, it could negatively affect your credit rating.
How much will a payday loan cost?
As well as paying interest, there are a number of other fees and charges associated with payday loans to watch out for. These typically include:
- Establishment fee. To cover the set-up of the loan.
- Monthly account fee. To cover ongoing administration costs.
- Late payment fee. If you default on a payment.
- Various collection charges. If your account goes into arrears.
The short-term loan application process
This is how the short-term loan application process works:
Step 1: Compare lenders
Finding the right lender is the first essential step of the application process. Review the loan amount, fees, turnaround time and the loan term to ensure you apply for a loan that meets your needs.
Step 2: Review the eligibility criteria and necessary documents
Every lender has different eligibility parameters, but generally, you need to meet the following minimum criteria:
- Be over the age of 18
- Be a New Zealand citizen or permanent resident
- Receive a regular income, either through employment or Work and Income benefit or both.
Typically, you need to provide the following documents to apply for a payday loan:
- Documentation to verify your identity, for example your driver’s licence, passport or 18+ Card.
- Proof of address, such as a recent utility bill, statement or government letter.
- Your employment details, including whether you work, how long you have been employed there, and the nature of your employment (full-time, part-time)
- Your income and expenses.
- If you receive Work and Income payments, you need to provide details of this and may need to provide receipts.
- You need to indicate whether you have taken out a short-term loan in the last 90 days and whether you will use this loan to pay off another payday loan
How do lenders use my documents to approve me for a loan?
While lenders ask you for different information, depending on which payday provider you apply with, it usually uses the information for similar purposes. Here’s how lenders use the following details:
- Your bank statements for the last 3 months
Lenders often go through the previous 90 days of your banking history, to get a general idea of your financial position.
Lenders need to be confident that you can manage the repayments, and will have money in your account on the day they plan to direct debit repayments. If your account does not show the income you say you earn, for example, because you receive some pay in cash, the lender will not approve you for the loan.
- Information to conduct a credit check
Your personal information helps lenders perform a credit check. All responsible payday lenders will conduct a credit check. However, the level of bad credit they allow differs. For example, some lenders accept you if you are a current or discharged bankrupt while others do not.
- Your Work and Income payment information
Payday lenders need to know you can comfortably afford to repay the loan, so want to see evidence of regular payments into your bank account. These can be from permanent Work and Income payments, private income or a combination of both.
- Your income, pay dates and expenses
The loan provider uses your income and expenses to determine how much money you can afford to borrow and uses the pay dates to set your repayment schedule. It verifies this using your bank statements.
Step 3: Approval
Lenders can usually let you know if you have received approval in a matter of minutes because most use a system to approve the application rather than a human being. If they require more information to accept you, the lender will contact you, but this may delay your application.
Step 4: The contract
If you receive approval, you need to agree to the loan contract before the lender sends the funds. Many lenders do this by sending an SMS or a copy of a digital contract that you sign online.
Review the agreement carefully, as it sets out your loan term, repayment amounts and the fees for late-payments or defaults. If you have any questions about the contract, contact your lender.
Step 5: How long it takes to receive your funds
The time it takes to transfer the funds differs between lenders and may also depend on who you bank with. If the lender uses the same bank, you may receive the funds within minutes of the lender sending them. Some lenders can also do this if you bank with any of the major New Zealand banks.
However, with most, you need to apply and receive approval by a specific time (usually around 3pm) for you to receive the funds on the same day. If you need the loan today, the earlier you apply, the better chance you have of getting the money.
Can I get a “no credit check” loan?
All responsible lenders will carry out a credit check to help them understand if you will be able to pay back the loan. Learn more about no credit check payday loans.Back to top
How to compare payday loans
As these types of loans become increasingly popular in New Zealand, borrowers are finding themselves with more lenders and more loans to choose from. You should take the following factors into consideration when deciding on the right product for you:
- Fees and interest. The interest rate and fees on a loan affect how much you have to pay back over the life of the loan. Look for a competitive rate and low fees.
- Repayment terms. Loan terms for payday loans can be around 2 days to 1 year. The length of the payday loan directly affects how much you pay because the lender may charge a monthly fee. Look at the loan terms on offer and use a loan calculator to determine how much the loan will cost over its lifetime.
- Quality of lender. Unfortunately, this is a sector of the market that can attract some unscrupulous operators. You need to ensure you take out a loan with a provider who is trusted and respected, and one who offers full transparency when it comes to the features and fees of your loan.
- Additional fees and charges. As well as upfront and ongoing charges, the lender can charge enforcement and default costs if you fail to repay your loan on time. Make sure you check how much the lender charges you if your repayment is late, you are sent a default notice or you need to reschedule a payment. If these charges are excessive, you may want to consider a different loan provider.
- The application process and turnaround time. Find out how you can apply, how quickly approval takes and when you can expect to receive your funds. If you need your funds by a specific time, this may be a deciding factor.
Tips on receiving approval for a payday loan
- Check the last 3 months of your bank statements. Lenders check these, so you also might want to take a look. Loan providers look for red flags, such as your account being overdrawn, or inconsistencies in the pay you receive into your account in comparison to what you state on the application. Other exchanges, such as gambling transactions, can also be an issue.
- Don’t apply for more than you can afford. Just because the lender allows you to ask for a specific amount doesn’t mean you should. For example, if you only apply to see how much you can get, the lender may reject your application entirely rather than approving you for a smaller amount.
- Provide as much information as possible. There can be a delay in many applications when the lender has to chase information. It can also lead to automatic systems not approving you for a loan instantly because you didn’t provide the necessary details. Check everything the lender needs and make sure you send it.
- Double-check the eligibility criteria. Lenders set minimum eligibility criteria which you need to meet before you apply. If you don’t meet one or more of the requirements, do not ask for the loan. It leads to a rejected application on your credit file, which makes it more difficult to receive approval for a loan in the future.
Can you take out a second payday loan?
It is possible to take out a second payday loan, but you need to meet more stringent criteria than with the first loan. This is not because lenders apply different rules to second loans but because payday lenders have to take further steps to ensure you won’t be under substantial hardship.
What do lenders look at when I apply for a second payday loan?
A lender needs to ensure you can repay the loan without hardship. To do this, it will review your current financial situation and look at multiple factors, including:
- Your credit history
- Your employment and income details
- The payments you make on your existing payday loan or any other loan
- Whether you receive Work and Income payments
How can I make sure I receive approval for a second payday loan?
There is no way to guarantee approval, and doing so for the second time is probably harder than the first. It’s essential to bear the following in mind:
- Before applying, re-examine the lender’s eligibility criteria. You may or may not be eligible for the loans you once were. Some lenders may specify you cannot currently be repaying a payday loan or use this one to repay a previous payday loan, so check to avoid rejection.
- Check your budget before applying. Can you afford the repayments of this second loan? If you think you are going to struggle to make multiple loan repayments, then you may want to consider alternative finance options, such as community financial assistance programs, or reconsider if you even need the loan. Payday loans are not a long-term economic solution and are only meant to serve an immediate need for funds.
- Compare your options before applying and always scrutinise the eligibility criteria. There are a range of payday loans available, so you have a better chance than ever of finding the right one for you.
Frequently asked questions about payday loans
Read more on this topic
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- Loans for bankrupts
If you have declared bankruptcy and need a loan, there are options available.
- $1,500 loans you can apply for
Find out which lenders will approve you for a loan up to $1,500 and what you need to apply.
- Loans for the unemployed
If you’re receiving Work and Income payments or you’re currently in between jobs, there still may be financing solutions available for you.
- Find a loan for $2,000
Do you need a small loan up to $2,000? Find out about the options available to you, eligibility criteria and what to be aware of before you apply.
I need cash ASAP. I’m on a solo mom benefit.
Thank you for your comment.
Being a solo mom can make you under the category of a single parent. There are lenders that may consider a single parent for a loan. Please check our payday loans for single parents and Personal Loans for Single Parents guides.
The guides have a list of lenders you may go to and inquire your eligibility for a cash loan. As long as they can verify that you can repay the loan and you are eligible to apply, they may consider you. Click the Go to Site button to apply. Please make sure that you’ve read the relevant T&Cs or PDS of the loan products before making a decision and consider whether the product is right for you.
Should you wish to have real-time answers to your questions, try our chat box on the lower right corner of our page.
Is there any payday loans that will except to photo is I can provide birth cert and cards with my name on it and a utility bill with my name and adresa on it pls help!