Hardship Assistance is the term Work and Income use to describe emergency grants and one-off payments. 

Important: You don't need to be receiving a benefit to access one-off hardship and special needs grants to help you pay an essential or emergency cost.

When you apply for Hardship Assistance, Work and Income will also do an assessment to see if you qualify for Temporary Additional Support. 

The benefits of Work and Income assistance include no interest rate being charged, no loan fees, money can be advanced as a grant (i.e. not a loan) and you can avoid applying for a low income loan.

More details: Visit our dedicated Hardship Assistance guide and our Work and Income tips guide for maximising the chances of being approved.

A limited number of charitable ventures operate in New Zealand, offering interest-free loans for specific purposes, as well as debt relief. They are designed to help low income earners rebuild their financial situation. This means the loans they offer are designed to help you pay for essential items for your home or other things that you cannot pay for in a lump sum, such as clothes and furnishings. This Stuff.co.nz article explains the schemes available, and how they help low earners buy the things they need. 

There are a number of incredibly helpful community lenders who offer fee-free or low-interest loans to low income earners. We list these below:

1. The Salvation Army
With branches across New Zealand, the Salvation Army runs a Community Finance scheme which offers affordable loans for approved low income people. Each application is made via the Salvation Army's Community Finance centre, which then works with you throughout the life of your loan. The loans offered include:

• No Interest Loan (NILS): Up to $1,000 for a maximum of 18 months. 
• Low-interest StepUP loan: From $1,000 to $5,000 at 6.99% for a maximum of 36 months.

Website: The Salvation Army Low Income Loans
Available: Nationwide

2. Good Shepherd New Zealand is a non-government, not for profit organisation, working in partnership with the BNZ, Kiwibank and three community providers - Aviva Families, The Salvation Army, and Vaka Tautua. It offers fee-free loans to people with limited incomes; schemes include no-interest loans and the StepUP loans (with an interest rate of 6.99% p.a.). 
Website:  www.goodshepherd.org.nz. 
Available: Nationwide 

3. The Nga Tangata Microfinance Trust offers Asset Building and Debt Relief loans to help ease the burden of excessive debt. The debt relief loans are to a maximum of $3,000, with capital provided by KiwiBank. The applicant must pay back the loan in full within two years, and they must have been working with a budget advisor for at least six months.
Website: www.ngatangatamicrofinance.org.nz
Location: Nationwide ​​
Brochure: Download here

Sadly, demand is enormously high for these services and each charity is limited by the total money they have to lend. If you think you qualify and urgently need the help, it is a good idea to contact an organisation and apply sooner rather than later. 

Lenders don’t see the money you receive from Work and Income as ‘income’, but they will be more likely to offer loans if you have security or a guarantor (someone who will repay the loan if you don’t). Such loans are risky – if you pledge your security (be it a car, home or something else), failure to repay the loan means the lender will own what you pledged. If you’ve asked someone to guarantee a loan (usually a parent, friend or sibling), this can cause a whole lot of trouble if and when you miss a payment.

Low income earners often have successful loan applications with credit unions – First Credit Union, NZCU Baywide and NZCU South are some examples. Credit unions charge lower interest rates and protect low income borrowers with fair and transparent fees. In many cases, a credit union can also offer repayment plans and more flexible loans.

Read our reviews here: First Credit Union, NZCU Baywide and NZCU South

COVID-19 changed everything, and banks have some responsibility to help low income earners who are unable to repay debt. If you owe money on credit cards or personal loans, ask about a hardship application. As a low income earner, a hardship application asks your bank to help you work out a more flexible repayment plan while your prioritise urgent payments.

If you already have a credit card and you have still not maxed it out, credit card debt is very likely to be cheaper than taking out a new loan. You’ll have to meet the minimum repayments (find out what your bank charges here) – it will either be 2%, 3% or 5% of the balance each month).

Low income earners are, generally, best to consider a low-interest credit card. Many credit cards don't charge fees, which makes them even more affordable. The best approach is to request a low limit ($500 or $1,000) and ensure you make monthly repayments (even if you can't pay off the balance in full). The interest rate and low fees is likely to cost far less than any personal loan.

More details: Visit our low-interest credit cards comparison.

If you have a KiwiSaver balance, you may be able to access it for free. You will need to prove that you cannot meet your 'minimum living expenses', for example basic food and grocery items, and accommodation costs (including rent, mortgage repayments, interest etc), among other expenses. Low income earners enrolled and contributing to KiwiSaver often have a balance in excess of over $5,000 which can be distributed by the scheme's trustee should you meet the requirements. 

Best of all, you won't need to take a loan and the money comes in a matter of weeks once approved. You'll need to submit a hardship application, and supply the required evidence.

More details: KiwiSaver hardship application

Depending on your family situation, this can be an option to get a helping hand while you reorganise your finances. However, asking for a loan from loved ones has risks - if you can't repay, you can lose friends and upset people. But, for many people, it works just fine. How much to ask for and who to ask is something that needs a bit of consideration.

More details: Our guide to lending money to friends and family members is written the view of the lender (i.e. person you ask for money), but it has some very useful information. 

​Anyone who offers you a loan on your doorstep is likely to be trouble. It sounds good – a lump sum and a repayment-free period, but the costs quickly get out of control. The interest rates and fees will be high, and the lender does not have your best interests at heart. Worst still, someone will visit your home every week or so to collect payment. It’s ugly and can very stressful if you struggle to make the repayments.