Rates | Fees | Disclosures

 

Standard Loan Agreement and Disclosures

Our standard loan agreement contains the disclosures required under the Credit Contracts and Consumer Finance Act.

 

Rates

  1. If you qualify for a loan from us, the loan is a 'flexi-pay loan' with an interest rate between 12.95% - 24.75% per annum (fixed for the term of your loan) and a minimum payment per week. Usually the minimum payment is between $55-$65.
  2. You can pay more at any time to reduce your loan and save on interest.
  3. There are no additional fees for paying your loan off early.
  4. A loan establishment fee may apply if your loan is approved.
  5. If you default on your weekly installment we don't double it, we just debit the minimum weekly payment again the next week and extend your loan term.  This means we avoid increasing any financial stress on you if you miss a payment.
  6. You can voluntarily pay more at any time - so you can easily reduce your loan term when you have more money again if you want to.
  7. If you miss any payments we can withhold your qualifications using them as security to ensure we get repaid.

 

Example;

Here's an example for a $3,000 loan paid off over 34 weeks (about 8 months). In this case, the student wanted to do some professional development in digital marketing completing online certifications from the USA. 

Initial Loan Amount Annual Interest Rate (%) Compound Periods (per year) Term (weeks) Actual Interest Paid Minimum weekly payment Additional Payments Effective Rate (%)
$3,000 14.95 1 34 $155.12 $49 $1500 5.17

Here is a breakdown of this loan

Remember, if you make only the minimum payment each week, you will pay more interest and it will take you longer to pay off your balance. Visit www.sorted.org.nz/creditcards to calculate how you can pay off your loan balance faster and pay less in interest.

 

Loan summary;

  • The student borrowed $3,000 at 14.95% per annum (fixed for the term of the loan) with a minimum payment of $49 a week
  • The student paid the minimum and in week 12 when they had some more funds, they paid an additional $1,000
  • They paid an additional $500 in week 30 as well
  • Their loan was fully repaid in week 34
  • Their effective interest rate (the total interest they paid divided by the original borrowing) was just 5.17%
  • The student never defaulted on payments so didn't incur any default fees
  • The student didn't apply for any hardship relief so didn't incur any loan variation fees
  • There is no charge for the student to apply for or establish the loan, or pay it off early
  • The student has only paid interest for the time they are using the loan for their education

 

Fees

Our approach is to offer very flexible, low cost, financially fair, and easy to administer student loans.  We can do this because of the automation we use, and because we predominantly lend online and directly through education providers who want to give students choice and convenience. 

However, we do charge fees if we have to chase payments, vary loans, or pursue debt.  In general terms you will be charged fees where;

  1. You accept a loan offer. We charge an establishment fee to cover our administration costs at the outset of the loan. You can pay this fee or add it to your loan amount.
  2. You don't pay your installment(s) when they are due. We charge a fee and it gets added to your balance and interest will accrue.
  3. You neglect to meet your payment obligations on a sustained basis and we have to send your debt to a collector or get a lawyer involved.

A summary of our fees charged when you depart from your loan agreement are below.  You can also find details of how and when we apply these fees in our standard loan agreement template.

 

Fee/Charge Amount
 When it's charged How it's applied
 Why it's charged
Dishonored payment fee $20 When you miss an installment or part pay an installment We just add it to your outstanding balance. Interest is charged on the dishonour fee if it's not paid Because you didn't pay so we don't have the money in our bank
Debt collection fees approximately 20% If your debt is assigned to a debt collection agency you must pay their costs.  Most charge around 20% on top of the debt they are working to recover Applied to your balance when it is loaded to debt collection but interest stops being charged once your loan is at debt collection Because the debt collection agency has costs that need to be met when they pursue a debt
Solicitor's fees Varies If we have to instruct a solicitor to act for us to collect unpaid debt Added to your debt but interest is not charged on this amount Because if you don't pay and we need to hire a lawyer it's a cost we hadn't budgeted in when we lent you the money initially

 

Saving Interest on Your Loan

Here are some details on how you can save interest costs by making extra payments on your loan when you can.