Debt Consolidation Loan

There are many companies that offer debt consolidation loans in New Zealand.  The requirements for a debt consolidation loan usually include bank statements for the last three months, unless you are applying to borrow from your current bank.  The banks, ASB and ANZ both offer online applications for a debt consolidation loan.  At the time of writing and until the 31st May 2012, ANZ is advertising an interest rate special of 14.95% p.a.  Many finance companies also offer debt consolidation loans with online applications available for many of them, these companies include FinanceNOW and GE Money.  However the banks will usually offer preferable terms.  More often than not, a credit check will be part of the loan application process, this may either be part of the online application process or it might be run manually later.  NZ citizenship or permanent residency is usually another requirement.

If you are an ASB Bank customer, and you use internet banking, they have an online debt consolidation application form which makes the whole process hassle free.  However note that BankDirect and ASB Bank share information and appear to have combined lending limits, so if you phone BankDirect to discuss a lending matter, you may end up speaking with an ASB staff member.  Additionally one of our readers mentioned that ASB Bank have a six month stand down period,  during which time no further credit applications will be approved; this might only apply to that customer or might be a general policy (even though our reader stated there was no mention of this in the loan terms and conditions).

One website visitor wrote that the Kiwibank Personal Loan Team misled them into believing that their loan would be approved once adequate security had been provided, however on provision of that adequate security, the website visitor was told that the loan was still conditional and then subsequently told that the loan had been declined, so ended up as a waste of time.  Keep in mind though that Kiwibank Personal Loans are actually managed by GE Money,

The interest rate of the debt consolidation loan may be less than your current loan or credit card rates, however  check the required monthly payment for the debt consolidation loan and compare it to your total current payments because if the new amount is larger then it may have a negative impact on your cashflow/budget.  One alternative to a debt consolidation loan that is often suggested is to either increase your income or reduce your expenses, however usually this option has already been explored previously.  Another option for credit card holders is to apply for a balance transfer to a credit card with a low introductory interest rate.  Many people take advantage of this by repeating this balance transfer process every time the introductory interest rate expires.  When exploring these options, a spreadsheet is useful to track your current income and expenses, current repayments and projected repayments to ensure that the change in debt structure is appropriate.  Also, it is advisable to seek the advice of an Accountant first.

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