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7 July 2021 | By Lending People

Knowing when to pull the plug on a loan application.

Thinking about a personal loan? Learn about lending criteria first. You may decide to wait until your finances improve or you may decide to apply online right away. But if you do decide to push ahead, our digital platform will assess the following credit criteria within a few seconds and provide a credit decision.

Knowing when to pull the plug on a loan application.

If you’re in the market for a personal loan, debt consolidation loan or vehicle loan, it pays to get your head around the lending criteria before making any applications. There’s more to loan approval than credit scores, and even with bad credit, it’s possible to get finance (you can read more about that here). But several circumstances will raise red flags for lenders and may actually cause you more trouble if you apply anyway. Here are five reasons why it might be worth holding off on any finance applications


Reason 1: You’re out of a job.

Generally speaking, if you don’t have at least part-time employment, it’s unlikely you’ll be approved for a loan. A responsible lender will never give someone a loan without being confident they can comfortably make the repayments. If they did, they’d be risking their own money and the credit rating of the borrower. That’s a lose, lose situation.

You may be wondering whether WINZ or IRD payments count. Unfortunately, this income alone probably won’t be enough to meet the repayment requirements. However, if you have a combination of employment and WINZ or IRD income, you may be eligible.


Reason 2: You have a new job.

If this is you – congrats! Now here’s the kicker… To be considered for a loan, you need to have consistent employment. That means being in a permanent full-time or part-time role for three months or longer. So, if you’ve just started, hold out for another few months before applying for any loans. It’ll vastly improve your chances of getting approved.

How does this rule work for contractors or people who are self-employed?

The trick if you are a contractor or self-employed is that you need to show income to the lender for responsible lending rules. This may mean, depending on the size of the loan, that lender will need copies of GST returns, IR3 or accounts


Reason 3: You’ve had recent payday loans.

A payday loan is when a lender gives you high-interest, short-term credit based on your income. Usually, it’s a portion of your paycheck and will be granted immediately. The problem with these types of loans is that they tend to indicate financial trouble, especially more than one.

We’ve talked about how responsible lenders won’t give loans to people who cannot make the repayments. Recent payday loans, or worse, multiple payday loans, are a red flag for lenders. They’re unlikely to approve you for a loan if they have doubts about your ability to pay it back.


Reason 4: you struggle to manage your money well

Lenders may get nervous if your bank accounts show multiple dishonours and reversed payments. This can indicate that you don’t have enough income to meet your current financial commitments. One solution is to pause on the loan application and wait 90 days until you can provide a set of clean bank statements.


Reason 5: You’ve been gambling.

By now, you’re probably noticing a theme. Lenders are pretty risk-averse. If you have ongoing or frequent gambling transactions in your bank statements, that makes you a high-risk borrower. A lost bet here, a bad hand there, and you might not be able to afford your repayments. Our advice? Give up the gambling, and the odds will be in your favour to get loan approval.


Reason 6: You’ve applied for a loan EVERYWHERE else.

Before applying for anything, it’s a good idea to shop around. We work with a range of trusted lenders, finding the fairest loan terms for each borrower’s unique set of circumstances. If you’d like to get a feel for the types of terms you might get, give our personal loan calculator a whirl, or apply for a loan online. Our process won’t affect your credit score, and you’ll have your answer within 60 seconds. There’s also no obligation to proceed if you get approved.


If you’ve previously been declined for a loan, it might be worth holding off on any more applications. Check out how you can improve your credit rating here. Or, get in touch with one of our advisers to discuss your options.

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¹Fees: We do not charge a fee to use our service (commonly referred to as a platform fee, broker fee, or referral fee) if you are an existing customer or do not proceed with a credit contract. A fee to use our service of between $0.00 and $995 is applicable in all other cases.

²Annual Interest Rate (AIR): The AIR offered by our Personal Loan providers ranges from 6.95% p.a. to a maximum of 26.95% p.a.

³Annual Percentage Rate (APR): Also known as the 'comparison rate', the APR is calculated by adding together the AIR plus any additional fees that may apply (like establishment fees). New Zealand law does not require APR disclosure, but doing so can better highlight borrowing costs. The APR offered by our Personal Loan providers ranges from 7.80% p.a. to a maximum of 27.91% p.a. The APR is accurate only for the representative example given below and may not include all fees like early repayment fees (if any). Different terms, fees or other loan amounts might result in a different APR.

⁴Minimum and Maximum Repayment Terms: Repayment terms offered by our Personal Loan providers range from 12 months to a maximum of 84 months.

Representative Example of the Total Cost of a Loan: If you borrow $20,000 over a repayment term of 36 months at an AIR of 6.95% p.a., your total repayments will be $22,493 (made up of $20,000 principle, interest charges of $2,243, and an establishment fee of $250). This example assumes monthly repayments and does not include premiums for any optional insurances or fees for using our service (if any).

Terms and Conditions: All approvals are subject to provider credit criteria and responsible lending requirements. The loan amount and interest rate offered will depend on your circumstances, the type of lending required, and the security (if any) provided. Provider establishment fees, terms, and conditions apply.