480,000 Kiwis fall behind on credit payments

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Credit arrears are the highest they’ve been in seven years as stubbornly high interest rates and the ongoing cost of living crisis bite harder.

According to the latest figures from credit reporting agency Centrix, 480,000 Kiwi consumers are behind on loan or bill repayments, with the year-on-year increase reaching 9.6%. That’s the highest level of arrears since February 2017.

The report also shows its people under 25 years old struggle the most, likely due to their lower incomes and limited savings. However, it shows that 30-40-year-olds are also starting to feel the squeeze.

More people are behind on their phone and internet bills, with telco/communications arrears reaching a new high of 11.7%. There’s also an increase in people not paying their personal loans and Buy Now Pay Later accounts, with arrears on those climbing to 9.9% and 9% respectively.

Loansmart Managing Director Murray Greig says these figures show the cost of living crisis continues to affect people nationwide.

“When the prices of everyday goods and services go up as much as they have, some people don’t have enough money to cover living expenses as well as loan payments.

“However, what they have to keep in mind is that falling behind on their loan payments affects their credit score, which could impact their ability to get credit in the future. It might be hard to make those payments when things are tough, but failure to do so could make the situation much worse in the long run.”

Murray says people who are behind on repayments should act sooner rather than later to find a solution. “For those who are struggling, debt consolidation can help lower loan payments”.

With interest rates set to remain high, and the unemployment rate projected to increase this year, it doesn’t look like there’s any relief on the way for consumers. So, don’t wait for things to get easier – seek help to get on top of this now before it gets worse.

Practical solutions if you’re swimming in debt

Loan Assessments

If you’ve fallen behind on debt payments, your financial situation may seem overwhelming. However, there is hope on the horizon – there are things you can do to reduce your debt payments and make your daily life a little easier to manage.

The first step is to get a free loan assessment through Loansmart. This is where we take an in-depth look at your finances and all of your loan repayments. This includes a breakdown of where you’re spending your money, and how much things like personal loans, car payments, credit cards and By Now Pay Later services are costing you.

After we’ve got that information, we can provide you with some advice about how you can reduce your debt to make the payments more manageable.

Debt Consolidation Loan

One solution Loansmart provides to many of our customers is a debt consolidation loan. This is where take all your existing debts and then issue you a new loan at a lower interest rate than what you were paying before.

This has several benefits. First, making a single loan payment instead of several is much easier to manage. You’ll be less likely to lose track and fall behind on your repayments if you only have to make one. Second, your payments will likely be lower, because the interest rate on our debt consolidation loan will probably be less than the interest rate(s) on your existing loans.

What if you have bad credit? The great news is we specialise in helping people who have had credit problems reach financial success. By consolidating your debts and making timely repayments, your credit score will improve and your financial situation will look brighter.