- Beneficiary Loans
Unravelling the mystery surrounding beneficiary loans
Are you unemployed, requiring short-term finance, but not sure where to turn? Maybe you are not eligible for a traditional bank loan and concerned about high interest rates on payday loans? Have you considered a beneficiary loan? Instant cash advances based upon your government backed benefit payments. Let us unravel the mysteries surrounding beneficiary loans and what they can do for you.
The beneficiary loans market in New Zealand is positioned between traditional bank loans and high interest payday loans. Often overlooked, this is an area of the financial sector which has shown huge growth in recent years. In many ways the COVID pandemic has highlighted the secure nature of benefit payments provided by the New Zealand government. Unemployment is no longer a barrier to financial assistance and the ability to take control of your finances.
Beneficiary loans from Crester Credit
Crester Credit is one of the leading lights in the world of short-term loans in New Zealand, proud of our reputation as a responsible lender. As a consequence, we have experienced significant growth in demand for beneficiary loans. Unlike some other lenders, we will require a degree of security and carry out credit checks so we can provide the most competitive interest rates. As a family business, we are appreciative of the difficulties many of our clients experience and will only provide affordable levels of finance.
Income security is the key to releasing finance
It is unfortunate that our business is often seen in the same light as a payday lender, many of which demand sky-high interest rates. As we touched on above, we are actually positioned between traditional bank finance and the payday lenders, offering very competitive interest rates. The interest rate offered will reflect your income and degree of security available. This is an ideal way in which to make your assets work for you – while at the same time providing the security we require.
The key to unlocking loan finance is a secure income stream, with the Work and Income benefit system in New Zealand (WINZ) providing gold-plated government security. The often fickle employment markets have been laid bare by the COVID pandemic, exposing what many traditionally believed to be secure forms of income. As a consequence, the relative security of benefit income is now coming to the fore.
Why might you require a beneficiary loan?
We are able to offer beneficiary loans from $500, dependent upon your level of income and security available. Due to the varying level of funding available, there are many different reasons why our clients require beneficiary loans, including:-
- Rental bonds
- Utility bills
- Medical expenses
- Housing maintenance
- Car loans
- School-related expenses
- Dental charges
- Vet bills
There is a common misconception that those who require short-term finance, loans for beneficiary recipients, are unable to manage their budgets. The truth is that many people across New Zealand live on a relatively tight budget. Unexpected expenses, such as any of the above, will unfortunately emerge from time to time, this is just life. The ability to tap into short-term finance, with the approval process taking no more than 24-hours, can help to reduce growing financial and mental pressures.
The beneficiary loan application process
While there is no doubt that finance businesses such as Crester Credit have benefited enormously from the online revolution, we also respect traditional application methods. Some customers prefer online applications while others have a preference for telephone communication. If this is your first beneficiary loan NZ you will no doubt have questions, concerns and issues you want to discuss. It can be daunting, it can be challenging but we are here to help and advise you accordingly.
At Crester Credit we value our reputation as a responsible lender, protecting customers and our long-term business. The fact that we carry out credit checks and require a degree of security perfectly reflects this. It makes no sense morally and from a business point of view to provide unaffordable loans to our customers. This only increases our default rate, and financial/mental pressure on our customers – there are no winners.
Crester Credit beneficiary loan duration/interest rates
We offer loans from $500, repayable over a minimum period of six months. During the application process, we will offer advice and guidance with regards to the duration of your loan. This advice will reflect your personal situation and is open to a degree of negotiation.
When it comes to interest rates, you will find that we are comparable to traditional credit cards, but much lower than the payday loan companies. Depending upon your level of income, security and credit rating, we can offer interest rates from 13.95% to 26.98% per annum. Even if you have a chequered credit history, this may not necessarily hinder your beneficiary loan application.
Do you have a chequered credit history?
Many of our customers have experienced financial difficulties in the past, including loan defaults and unpaid bills. We are here to help, rebuild your confidence and your financial strength, all within a secure and sensible framework. As a consequence, even if you have a chequered credit history we may still be able to provide loan finance if you can provide an appropriate level of security.
There are many different assets you can use as security, including:-
- Future financial windfalls
This list is by no means exclusive as we are open to utilising many different types of security. Please feel free to ask the question.
Beneficiary loans with guarantors
While the vast majority of our clients are able to offer a degree of security, some of them prefer to go down the guarantor route. In effect this means that a third party will take on the role of guarantor in the event that you were to experience financial difficulties. This might be temporary missed/late payments or a default on your loan. It is very rare that guarantors are called upon to repay outstanding loans, but it offers a degree of security which is reflected in the loan interest rate.
Prior to approving any loan agreements in which a guarantor will partake, we ensure they are fully aware of their role and the potential risks. It is important that all parties involved in your beneficiary loan application are clear about their obligations and responsibilities. This is also a legal and regulatory requirement, part of the enhanced protection available to customers.
Structuring your loan for your situation
When looking at any financial transaction it is important to focus on both affordability and the structure of your loan. While in theory you may be able to afford a $1000 loan, it needs to be structured in a manner which reflects your ability to pay. We appreciate that many customers prefer to pay off their loans as quickly as possible, reducing financial pressure and avoiding additional interest charges. But is that always the best option?
If you have excess capital of $100 at the end of each month there may be a temptation to set your loan repayments to reflect this. In reality, it may be prudent to set your repayment level at $60 a month and extend the duration of your loan. This gives you a degree of “headroom” between your monthly repayments and your available capital. Why?
The fact that many of our customers apply for beneficiary loans to cover unexpected short-term expenses, reflects this reality. What would happen if you had an additional unexpected expense? This may cause you to default on your loan repayment, attracting additional interest and charges. In a worst-case scenario, we may be forced to call in your security or transfer payment obligations to a guarantor.
Here at Crester Credit we have learnt many things during our time in business, one of which is to expect the unexpected and to be prepared.
What if your financial situation changes?
Unfortunately, some of our customers experience additional financial difficulties which can impact their ability to cover monthly beneficiary loan repayments. There is a dangerous misapprehension that informing your lender of any financial difficulties could put your loan at risk. In reality, we would prefer to work with you at the first signs of financial difficulties, to help you get back on your feet.
There is a tendency for those experiencing difficulties to bury their head in the sand and ignore it. However, unless your financial situation is addressed at the earliest possible opportunity, it is unlikely to improve. Working with you, we may be able to restructure your loan repayments, offer short-term payment adjustments or even refinance and extended the duration. The sooner you approach us, the sooner we can address your issues.
If you leave it too late, this will limit the options available and can make a difficult situation even worse.
Regulatory protection for clients
The protection set out in the Credit Contracts and Consumer Finance Act (CCCFA) is central to the regulatory framework of the New Zealand financial sector. These legal protections complement our moral code of practice which has been ingrained in Crester Credit since founded as a family business. As a company offering financial services, we are legally obliged to:-
- Abide by disclosure regulations
- Ensure all loans are affordable
- Structure loans around a client’s ability to pay
- Make clear all terms and conditions
- Work within legal interest/fee limits
- Offer assistance to those experiencing financial difficulties
Detailed company information, and services provided by Crester Credit are listed on the Financial Services Providers Register. In the unlikely event of disputes with our customers, we are also part of an independent resolution scheme.
As a family-based business, Crester Credit has managed to maintain a competitive business edge while retaining our original community roots. We take our role as a responsible lender extremely seriously and are honest and upfront with all loan applications. In order to provide affordable finance and protection to all parties, we work on secure income streams complemented by security/guarantors.
Contrary to popular belief, living on benefits is no longer a barrier to loan finance. We offer a range of services including beneficiary loans which are structured around your requirements and financial resources. Please feel free to peruse our website or contact us directly if we can be of assistance.
by Mark Benson
April 23, 2021
Mark previously enjoyed 15 years as a stockbroker/financial adviser and still maintains a strong interest in all things financial. Over the years, he has written about subjects such as property finance, loans, pensions, insurance, stock market investments, tax planning and more. Mark believes it is essential to keep up with the latest financial regulations and adapt your finances accordingly, something he portrays in his financial articles.