How you can repay student loans and save for retirement at the same time How to find out which loan suits you
A car loan, a hire-purchase contract for a laptop – it’s easy to quickly get into debt for consumer products.
But if this is not handled well, consumer debt can quickly become a problem.
The accrued interest rates are much higher than for housing loans – often from 14 to 23 percent of the major lenders, depending on the borrower’s credit history and whether they offer security for the transaction.
If you need a loan, here are a few things to think about first.
Explore your options
The Trade Commission recommends that borrowers pay time to consider all possible ways of borrowing money and fully understand what they are getting.
Make sure that you do some research to get the best offer for yourself. For example, you need to look at interest rates and default interest rates, credit charges, the total amount you will pay during the loan term, and how long the period is. New laws on loans have simplified the procedure for buying at best, when you are looking for a loan.
All lenders should now display standard credit contracts and the cost of borrowing on their websites and their enterprises. You can ask about it, and it should be provided immediately and for free. This allows you to compare interest rates, as well as other expenses, such as default fees, before you subscribe to the dotted line.
If you have a good credit history, you should be able to take your choice of lenders. The choice is the financial companies, banks and peer platforms.
Those who have a home loan can use this capital, although it is important to structure new lending so that it will pay off quickly, rather than during the term of the mortgage.
But it’s worth considering whether borrowing is the only way. If you want to buy something that is not urgent, it’s better to save money to save money to buy this product, without having to borrow.
Read before signing
It sounds simple, but many people do not read the documents that the lender provides.
It is important that people understand any duties that will be applied, including duties for default, and what happens if they missed the payment.
The lender must go through this with you and make it clear. The Commerce Commission said that expensive short-term loans, in particular, could get out of control when payment was missed, and duties were added by default.
They can charge you only the fees that they disclosed, and all fees should be related to actual costs.
In one case, the borrower had a loan for $175. She paid him $55 a week for eight weeks, or only $440. But whenever she missed the payment, she was charged with $49 as a payment for dishonor and $30 for “payment for a letter.”
After the FSCL investigation, the borrower was finally allowed a balance of $590 on the loan after the repayment of $330.
After you have signed the agreement, you have five days to cancel it. You will need to return any money that was given to you.
Know the interest rate, not just the amount of payment
Borrowers often focus on what they have to pay each week, and forget the total interest cost of the loan. Your lender must make a clear interest payment to you.
A lower weekly repayment over a longer period of time is not always a better deal than a shorter period with higher payments.
Regardless of your payments, it must fit into your budget.
If there is a risk that you will not be able to make payments on your loan, report it to your lender as soon as possible. In some cases, it is possible to make an application for difficult situations to shorten or suspend payments for a while.
Lenders are obliged not to allow you to engage in quarrels.
The Law on Credit Contracts and the Law on Consumer Crediting of 2003 introduced the principle of the lender’s liability. The new law applies to all consumer credit contracts concluded since June 2015.
The new rules require reasonable requests from creditors to ensure that the loans they provide are affordable, suitable and help the borrower understand them.
Lenders should assess your ability to repay the loan at the very beginning and be reasonably confident that payments will not mean that you are suffering “significant difficulties”.
The law now requires that all creditors offering consumer credit be registered in the Register of Financial Services Providers and belong to the dispute resolution scheme. If you have a dispute and you do not get anywhere with the lender, you can take this issue into your scheme to figure it out.
Secured or unsecured?
If you offer something as collateral for a loan, it usually means that you get a better interest rate. But this means that the lender may have the right to accept it if you can not pay.
It is important to understand what you are agreeing to.
If the treaty does not say that they can accept it, they can not.
The new rules now make it illegal for creditors to provide security for certain basic household items, such as beds, heaters, washing machines and kitchen equipment, unless you borrow money to buy these items.
Lenders must specifically list the goods they use to secure the contract, or if you agree to provide something as collateral later after you have signed the contract, the lender must provide proof in writing. Lenders can not use the dragnet offer as “all present and after the acquired property” to return all of their belongings.
Some payday creditors include the Office of Payroll with their contracts. This means that they can ask your employer to take your loan repayment directly from your wages if you have signed credentials under the contract.
Some creditors say that these powers are “irrevocable” – they can not be canceled. This is misleading. You can revoke the powers, but if you do, you may be in violation of the loan agreement. Talk to your creditor about this.
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