Payday Loans Review & Guide

If you have landed on this page, please visit our other pages on alternative financing – personal loans and low interest credit cards.
 
It is our view that a Payday loan must only be taken out as a last resort. If you need cash now and are SURE you can repay the loan, a Payday loan is a solution. If you are uncertain about whether or not you can repay, Payday lenders will smash you with fees and penalties, turning a $500 loan into a $2,000 nightmare. In short, only borrow if you know you can repay.

Do you still want a Payday loan?

We have all the information to help you compare the different lenders in the market. Our guide shows the “APR” (annual percentage rate, i.e. the interest rate), late fees and three examples of regular cash loans taken by other New Zealanders. 

Our “Top 5” Least Worst Payday Loans

Coming soon

How to pick a Payday lender that is best for your needs?

Find the cheapest price for your Payday loan

Interest rates and default fees vary a lot in New Zealand. The lowest interest rate charged by one company is close to DOUBLE the interest rate charged by another. On average, you pay $45 for every $100 borrowed in fees and interest. Fees are largely consistent across Payday lenders, so finding the best interest rate will help you save a lot of money.

When comparing, make sure you know:
  • What $ total you will repay if you repay on time
  • The late repayment fees and late payment interest rate if you cannot pay. This is equally important, as the penalties can be hard to repay once incurred. 

AVOID Payday loan Brokers

Unless it’s a company mentioned in this page, there is a chance it is a broker, a middle-man, who looks like a Payday lender but will only send your details to lenders once you make an application, and earn a fee from you or the lender, or both. These businesses have no purpose, and are best avoided. 

Check the company is operating and can pay same-day

Kiwi Payday loan providers have a history of being flaky or closing down overnight. Avoid the hassle, uncertainty and anxiety by giving a lender a call to make sure they’re operating. All of those in our list are active and lending.

What information do I need to be able to apply for a Payday loan?

​Generally you need to be the following to qualify for a short-term loan:
  • Be at least 18 years of age, living in New Zealand
  • Receive an after-tax income above $350-$400 per week, and be in permanent employment (as an employee). Your employer may be contacted to verify your employment. However, Payday lenders do not disclose the nature of the loan.
  • A proof of address, like a bank statement or utilities bill.
  • You need a bank account, and your income needs to be shown to be deposited into that bank account.
  • You need a mobile phone and email address
  • You can receive a payday loan if you also receive a benefit, but you must still meet minimum weekly income thresholds. 

Our “Top 5” Least Worst Payday Loans

​We don’t agree with Payday loan practices and their high interest and fees, so for that reason we have called the least expensive lenders the “least worst”. New Zealand, unlike the UK and USA, has no law against what interest rates Payday lenders can charge you. However, we’ve done our best to make it clear what fees you will pay and how to reduce your overall Payday loan cost. 

Important Information about Fees and Interest costs:

  • The interest rates charged varied hugely. We recommend shopping around for a Payday loan.
  • The more regular repayments you can make, the cheaper your loan will be. Making 4 payments of $100 each week is going to decrease your outstanding loan and therefore incur much less interest expense than making a payment of $400 at the end of the month.
  • Lenders charge commonly charge around $40 if you pay late. Additionally, some lenders charge a late payment penalty interest rate of 0.25%-0.5% per day for the loan balance owed.

Our “least worst” Payday lenders are ordered from lowest to highest APR, indicating affordability.
 
Specifically:
  • The higher the APR, the more expensive the loan is.
  • “Total repayment” is the original loan amount, interest costs and fees applied for a single payment made at the END of the term (2 or 4 weeks as stated).
  • “Early Repayment” means you are allowed to repay early, therefore saving you money. 

​While we normally rank the best options on price, we considered many factors, including:
  1. Interest rate
  2. Fees (initial and default)
  3. Membership of the Financial Services Complaints Ltd body (https://www.fscl.org.nz)
  4. Limit of loans to $1,000
  5. Credit check – we favour lenders who check to make sure a Payday loan is affordable before saying yes. 

What happens if I can’t repay?

All Payday lenders are prepared for this and offer solutions to help you.

Firstly, contact your lender as soon as possible and be honest with them about the fact you are unlikely to be in a financial position to repay. You will be given the option to adjust the repayments to best suit your cashflows. Be aware that the longer the repayment term, the more you will be in interest.

If you have suffered illness, injury, loss of employment, the end of a relationship, or any other reasonable cause to be unable to make payments since taking the loan, you can apply under financial hardship with your lender. Lenders offer loan repayment holidays and/or interest caps when the conditions are met.
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If you do not contact your lender and do not make payments, you will be chased and billed for the chasing, ranging from $10 per letter sent to $500 for a court order. Non-payment has the potential to cause a lot of hassle. 

If you feel as if you’ve been misled or taken advantage of:

​You can take your lender to the (free) Financial Ombudsman Service which can adjudicate. Before you do that, complain to the lender first. If you are not satisfied, take your case to the Ombudsman. 

Help if you've already got a payday loan

​If you have an existing Payday loan, there are many ways to get your finances back on track and avoid those type of loans in the future. Please read the suggestions below – all have been proven to help bring down debt dependence and lower the risk of needing to get another Payday loan. 

Use any existing credit card to the max

Find out what your limit is, and use it to the maximum for your “normal” monthly spending. When it comes to paying the bill, we recommend paying the minimum payment (often around 5% of the balance owed). While you’ll pay interest, standard credit card interest is rarely more than 25% per annum, or 1/20 of what a Payday lender will charge you! With the spare money you have from using your credit card, pay off the Payday loan.

Have available balance on your credit card? Consider a cash withdrawal

The fees and interest charged on a credit card cash withdrawal a tiny compared to a Payday loan. While withdrawing cash from a credit card is never ideal, it works well to pay down a Payday loan. Even if it’s $100 or $200, sending that to your lender will safe you much more in the long run. 

Increase your credit limit

As credit cards provide cheaper money than Payday lenders, call your bank or credit card provider and see if you can increase it. Small increases can sometimes be done through internet banking. You can then make a cash withdrawal and pay off the Payday loan. 

Get a 0% balance transfer credit card

With many banks offering 0% interest rates on credit card balance transfers, apply for a balance transfer on your credit card to shuffle the debt to “interest free”. You’ll get 6-12 months to chip away at the payments without incurring fees. This is the cheapest personal debt you can get. Use the money you would have needed to pay off the credit card to pay off the Payday loan. 

Look at a personal loan

​If the credit card option isn’t suitable, consider a personal loan (LINK PAGE). The interest rate is much lower than a Payday loan (20% vs 600%!) and you have more flexibility with the repayments. Personal loans may take more time to organize, but they provide money to help you get yourself back on your feet. The first thing to do is pay off the Payday loan. 

Borrow from family, not friends

We don’t recommend borrowing from friends for many reasons. Family is easier, and readers tell us that the order of asking should start with siblings, then cousins, then parents. Talking about your money problems with family members may also offload some worry from your mind. If a family member is prepared to help you out, write down the amount and when it will be repaid. Use their money to repay the Payday loan. When it comes to repayments, make sure you make them! It gets ugly if you stop paying or communicating once you have their money. Be upfront if you can’t make a repayment, but at least offer them something, even if it’s $20 or $50. Your family will respect you.   

Increase your bank account overdraft

Our overdraft fees page (LINK) sets out what banks charge for providing an overdraft. The fees can be high, but again it’s cheaper overall and less aggressive than a Payday loan which can be paid off once the overdraft limit increase is approved. 

Our 2 Cents on Payday loans

We don’t like them at all. Unlike the USA, New Zealand has little regulation to cover Payday lenders and borrowers. For example, Payday lenders do not have to display their interest rate on their website or marketing materials. We find this unacceptable.
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We know from our reader comments that a growing number of working poor Kiwis are repeatedly relying on Payday loans. We keep this page up to date to show the best value lenders on offer, as well as a list of proven suggestions to break the reliance on high interest loans. We are in the process of lobbying government for the following changes:
  1. Make it mandatory to show interest rates so borrowers can compare and make informed decisions about each lender
  2. Cap the loan, fees and interest repayments to TWICE what was originally borrowed, avoiding hardship situations which see a $1,000 loan turn into a $4,000 nightmare. 
  3. Scrap default interest rates, which are aggressive and unnecessary
  4. Credit checks for all applications – Payday lenders must only lend to people who actually have the income to repay.
 
Remember, before you decide to get a Payday loan, there are alternatives. Have a look at our personal loan and credit card guide <LINK>.