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Payday Loans - A Warning 

1. We take the view that a Payday loan must only be taken out as a last resort.
2. If you need cash now and you are SURE you can repay the loan, a Payday loan is one solution.
3. If you are uncertain about whether or not you can repay, Payday lenders will smash you with fees and penalties. 
4. An urgent $500 loan can turn into a $2,000 nightmare.
5. In short, only borrow if you know you can repay.

Payday Loans Summary

• ​Interest rates start at around 1% per day, but many lenders go higher 
• Fees and administration costs add up - and some lenders charge a fee for every direct debit payment
• There is no regulation of Payday lending in New Zealand, meaning there is little protection from sky-high fees and interest rates. 
• Alternatives to payday loans exist, and should be considered  before the trigger is pulled on a payday loan application. 
• Payday loan applications will show up on a credit report, meaning any further lenders will see that you needed fast cash.

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We've put together a helpful guide to let 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 and the costs involved in repayment.

Annual interest rate: 167.9% to 292% + Establishment fee: $46 to $150

1. Total repayment for $500 borrowed for 4 weeks: Up to $589.64
2. Total repayment for $1,000 borrowed for 4 weeks:  Up to $1,239.34
3. Failed Payment/Default Fees: $40 - $50 per week

*Note that minimum loan terms is 4 weeks.
*As of 01 May 2020, the total interest(s) and fee(s) charged on all of their newly contracted high-cost loans are capped at 100% of the amount of the loan advance. For example, the maximum recoverable for a non-related loan of $300 must not exceed $600.

• ​Paydayloan.co.nz: 44.95% 
• Savemybacon.co.nz: 49.95% (read our review)
• Moola.co.nz: 292% (92 to 183 days, loans between $500 to $2,000) (read our review)
• Cashburst.co.nz: 44.95%
• Paydayadvance.co.nz: 44.95%

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Know this:

1. We have not linked any Payday lenders to this website as our view towards them is very negative, and
2. We do believe there are alternatives to Payday loans.
3. Our presentation of loan repayment calculations is for illustrative purposes only. 

• The interest rates charged will vary hugely at any moment, and 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 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.

 
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 is preferred, but as Payday lending is largely unregulated non-membership is standard
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.  ​

All Payday lenders are prepared for this situation and offer solutions to help you. You'll need to follow everything through from your end to have the best shot at being helped out. 

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 interest charges you will have to pay.

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 their 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. 
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​You can take your lender to the (free) Financial Ombudsman Service which can adjudicate. Before you do that, you must complain to the lender first. If you are not satisfied with their response, take your case to the Ombudsman. You'll need to have all records of your dealings whereby it will be assessed and either be heard or rejected. 
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​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. 
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We don’t like Payday loans at all. Unlike Australia, the USA and the UK, 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 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 the 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.

 
Alternatives do exist
Remember, before you decide to get a Payday loan, there are alternatives. Have a look at our personal loans guide and low-interest credit card guide.