At times you might have found yourself in a situation where your finances don’t make it to the end of the month, whether due to an unexpected expense such as a doctor’s bill or car repair or even some irresponsible spending. In these situations, when scraping together the last few cents before the end of the month, you might be tempted to take out a payday loan.

If it’s your first time applying for a payday loan, you’re bound to have several questions about the process and what it all means. Here are some important things you need to know about payday loans in New Zealand.

What is a payday loan?

A payday loan is a small, short-term loan. The amount will usually be between $100 and $600. The loan is designed to relieve you financially until your next paycheck arrives and as such it will never be more than the income you will receive over the next month or so.

What is the difference between a payday loan and a personal loan?

Personal loans offered by banks or other credit unions have strict eligibility criteria whereas cash lenders are more flexible and will consider those with bad debt. Personal loan interest rates are based on your credit score and can range between 5% – 35.99% whereas interest rates for payday loans are fixed for the loan term. Payday loans can be paid out in as fast as 60 minutes; personal loans can take up to 48-hours to pay out.

Choosing the right loan provider for your payday loan

Unfortunately, there are unscrupulous and unreliable providers out there who will prey on people with bad credit or desperate people. Make sure that the provider is a lender and not a broker. Brokers are the middleman and may require an extra fee.

Other things to think about when choosing a loan provider:

  • What day do you plan to repay the payday loan? The longer the term, the higher the costs will be.
  • What the total repayment amount will be if you repay the loan on time and if you would be able to afford the amount.
  • What the late payment fees are and the late payment interest rate is if you are not able to pay.

At the end of the day you need to have exhausted all other options before taking a payday loan. It remains your decision and responsibility to ensure you will be able to pay the loan. Cash Relief has made it easy and convenient to apply for payday loans online, no faxing or scanning documents.