If you’re a single parent and in need of a loan, you might feel your options are limited, which may be because you work part-time and don’t meet the minimum income requirements set by lenders. Maybe you receive a Work and Income benefit that makes you ineligible for a personal loan. Either way, if you find yourself unable to access a traditional personal loan or a credit card, you might want to consider a short-term loan.
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 8:00am 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 works 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.
Payday loans from $400 to $900 with an interest rate of 292% p.a.
Loan term: 6 - 16 weeks
Eligibility: Must be at least 22; in full time employment or receive a full-time benefit; have a minimum income of $500 per week after tax; be a New Zealand citizen or permanent resident.
Payday loans are a small, short-term finance solution that lenders design for borrowers to repay in line with their pay frequency and income. You can usually borrow between $100 and $2,000 for a period of 2 days to six months, or up to $5,000 for one year. The turnaround time is relatively quick and may be an option for people on a lower income, receiving a benefit or in need of the money quickly.
Please be mindful that these loans often come with higher fees and shorter loan terms, so make sure you can meet the repayment obligations before you commit to a loan.
I receive Work and Income benefits, can I still get a loan?
Yes, there is a range of lenders that consider borrowers who receive Work and Income benefits. On this page, you can find out what options you have, and the eligibility criteria you need to meet.
My credit history is not good. Am I eligible for a payday loan?
The majority of payday lenders consider you for a loan even if you have bad credit. Lenders may have other eligibility criteria you need to meet, such as receiving a regular income or only receiving a proportion of your income from Work and Income. As long as you meet the minimum criteria set by the lender you can apply.
How to find the right loan for you
If you’re in need of quick funds, it may tempt you to apply for the first loan you see, but there are a few things to bear in mind:
How much you can borrow. Lenders usually offer between $100 and $2,000, but if you’re a first-time borrower, you may be eligible for less. There are higher loan amounts available – up to $5,000 and $10,000.
When you need to repay the loan. A lender usually offers you a loan term to suit your pay frequency. For example, if you receive your pay fortnightly, your repayments are set to be taken from your account every two weeks. However, loan terms can extend up to one year.
What are the fees? You need to carefully read a lenders product disclosure statement (PDS) where it has a full account of all the fees and costs.
When you will receive the funds. You can usually receive your funds on the same day you receive approval, although some lenders may transfer it to you the next business day.
What other finance options do single parents have?
There are alternative finance options a single parent can consider.
Work and Income advance. If you receive Work and Income payments, you may be able to obtain an advance on your benefit if you have an immediate need for essential goods. However, you have to pay it back, but it may be possible to do so in instalments. Depending on what the money is for, Work and Income typically directly pay the supplier. How much they lend you is dependent on what the money is for – for example, rent, school uniform or supplies, appliances or furniture.
No Interest Loans Scheme (NILS). Good Shepherd New Zealand provide these loans, which are designed for purchasing essential goods and services. You can apply for up to $1,000, and Good Shepherd arranges it so you can make repayments at an affordable amount over a set period. You need to have a Community Services Card, have resided in your current premises for three months or more and show a willingness and capacity to repay.
Ngā Tangata Microfinance Trust (NTM). NTM is a registered charitable trust, that provides loans free of interest or fees. Two loans are on offer, an Asset Building loan, that you can use for necessities such as medical or dental costs, bedding and whiteware and a Debt Relief loan which can only be used to pay off another high-interest loan. Other conditions apply, so check out its website: ngatangatamicrofinance.org.nz
Things to consider before applying for a payday loan
While payday loans may seem like a good solution to take advantage of, you should be aware of a few drawbacks. One is the extremely high-interest rates and fees charged by payday lenders. While the Financial Markets Authority is responsible for regulating the loan business, they are still a high-cost product. Use the payday loan calculator below to get an idea of what your repayments will be.
This calculator is designed to provide you with an estimate based on the numbers you enter. Your personal details are not taken into account and all calculations are based off the calculation model. This calculator is not intended to be the sole source of your information when making a decision regarding your loan, and this calculator also does not guarantee your eligibility. The calculator works off the following assumptions: fees do not change for the life, your lender will charge a 20% establishment fee and a monthly fee that is 4% of your principal loan amount. You may want to seek advice from a financial professional before signing up to a loan.
How you can apply
Applying for a payday loan is straightforward. You can start by comparing your options using the comparison table on this page. Once you find a loan that suits your needs, click the “Go to site” button, which redirects you to the lender’s online application form.
You need to provide the following:
A form of identification e.g. drivers licence, passport.
90 days of your bank statements (some lenders can connect straight to your bank account to access “read-only” copies).
Details of your employment and financial situation.
The application won’t take long to complete, and you should receive an instant response as to whether the lender approves the loan. Once you sign the loan contract, you receive the agreed amount within the time the lender specifies.
Matt Corke is Finder's head of publishing for rest of world and New Zealand. He previously worked as the publisher for credit cards, home loans, personal loans and credit scores. Matt built his first website in 1999 and has been building computers since he was in his early teens. In that time, he has survived the dot-com crash and countless Google algorithm updates.
If you apply with Ferratum, it will be same day if approved. If you are a new customer with qualifying credit, you can enjoy 30 days interest and fee free on first short-term cash loan.
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How long does it take to get approval? Would I be informed to a loan?
Hi Caroline,
Thanks for leaving a question on finder.
If you apply with Ferratum, it will be same day if approved. If you are a new customer with qualifying credit, you can enjoy 30 days interest and fee free on first short-term cash loan.
Cheers,
Joel