Kiwis are experiencing a debt crisis. Household debt as a percentage of income went up from 53% in 2014 to 164% in 2019.
In 2015 over half of New Zealanders were in debt. The average amount was around $79,000 per person.
That debt included loans for real estate, education, and consumer durables such as cars, household appliances, and boats. Often that debt makes paying bills or having the ability to pay for items such as groceries difficult.
For many, a short term loan can help them until their next payday. And getting short term loans is easier than you’d expect. Keep reading to learn five ways to get quick loans.
What are Short Term Loans?
A short term loan is essentially a microloan given to individuals who need extra cash temporarily to help them pay personal or business bills. These quick loans are designed so that you can only borrow a few hundred dollars at a time.
You’re also expected to pay the loan back after a few weeks. You may even need to leave a written check when you apply for the loan so the lender can immediately cash your check once you have sufficient funds.
No Credit Check Loans
While short term loans tend to be easy to acquire, they come at a steep price. You can usually obtain a loan without them performing a credit check. This is great for those who have bad credit.
However, compared to other types of loans, short term loans have high percentage rates. You may borrow $100 but need to pay back $120 which makes your percentage rate 426%.
If You Fail to Repay Your Loan
If you fail to repay loans NZ, you often can extend the loan to give you more time to pay it back. However, the fees get higher the longer you wait to pay it back and you may end up owing a lot more than you originally planned on.
1. Apply for a Payday Loan in Person
Look for businesses in your area that have “currency exchange” or “payday loan” in their business name. You can easily find them doing an online search.
Criteria to Qualify for a Short Term Loan
You’ll have to provide the following information before a lender will approve a loan for you:
- Proof of citizenship, permanent residence or valid work visa
- Be 18 years or older
- Have an active bank account
- Be employed
- Have a valid email account
- Have an active mobile phone
Your income must also be directly deposited into your bank account regularly. Your net income also needs to be at least $400 per week.
2. Apply for No Credit Check Loans NZ Online
The procedure for getting a short term loan online is similar to getting one in person. You’ll still need to verify your identification, employment status, and income.
The lender may require you to fax or scan certain documents to provide proof of income, etc. And you’ll have to link your banking account with them.
Linking your bank account lets them directly deposit funds into your account. The lenders can then also schedule when you’ll pay them back and draw the funds automatically from your account.
3. Short Term Business Loans
If you own a business, you’ll need a business loan rather than a payday loan since you don’t get a paycheck from an outside source. While every lender has different terms to qualify, they’ll all ask for the following information:
- Have been in business for a minimum length of time
- A decent credit score
- Meets a specific annual income level
Usually, you’ll have to have been in business for longer than one year with a minimum credit score of 500. You’ll also need an annual income of $100,000 or higher.
4. Head to a Pawn Shop
If you own something of value, you may want to shop around at local pawn shops. The pawnbroker will access the item(s) to determine what the fair market price is.
Before you head to the pawn shop, do an online search to find out what the fair market value is for yourself. That way you’ll know if you’re working with a reputable pawnbroker.
Advantages of Using a Pawnbroker
Using a pawnbroker means you can quickly and easily get the money you need. And there’s no credit risk which means no one comes after you for repayment if you fail to pay back the loan.
However, if you do fail to pay back the loan, you automatically relinquish the item you pawned. Never pawn anything you can’t afford to lose.
What to Expect
The loan is based on a percentage of the fair market value. Expect percentages around 50%. You may get a higher percentage if you choose to simply sell the item rather than pawning it.
Most pawnbrokers give you around a month or two to repay the loan. Always review contract terms before accepting an agreement.
5. Borrow From Friends or Family
If you don’t qualify for any of the above loans NZ or own anything valuable, you may want to consider asking friends or family to give you a personal loan. You’ll also be able to negotiate a more flexible repayment schedule and much lower interest rates.
However, make sure you do things properly so your relationships don’t get ruined. Put everything in writing so that both parties agree on the terms and conditions.
Thankfully, gift duties and levies were abolished in 2011 so you don’t have to worry about having to pay tax or interest to the Inland Revenue Service.
Do Your Research
Before you take out any type of short term loan, make sure you fully understand the terms and conditions. Check out multiple sources so you get the best interest rate possible.
And never take out a loan unless you’re absolutely sure you can pay it back when it’s due. Some loans are paid back in instalments but other loans are expected to be paid back in full.
Where to Get Quick Cash
Short term loans are for people who need cash quickly. But it can sometimes feel overwhelming to know where to go and which institutions you can trust.
We’ve already done the research for you. Click here to find the best quick cash loans of 2019.