Debt help in New Zealand: where to start, and what it means for a car loan
Free debt help is available across New Zealand, and the best first step is usually a call to a free financial mentor before you borrow again. How you deal with your debts also shapes any car loan you apply for later. Nobody can promise approval, but lenders decide case by case, and a settled, documented plan usually reads better than a pile of missed payments.
The short answer
If debt is getting on top of you, ring a free financial mentor before you apply for anything new. Mentors are trained to look at the whole picture: what you owe, what you earn, and what you can sensibly pay each week. They can also talk to your lenders for you. That conversation costs nothing, and it does not go on your credit file.
This page is for people who want a clear map of the options and who also wonder what it all means for a car loan. Fair Finance is a referral service, not a lender and not a financial adviser, and we cannot give you personal advice about your debts. What we can do is point you to the right free services, and later, if a car is the next step, run one soft credit check across a panel of lenders.
Free help, in plain terms
These are the main free services in New Zealand. Contact details can change, so check each website before you call.
- MoneyTalks. A free, confidential helpline run by FinCap and funded by the Ministry of Social Development. Call 0800 345 123, text 4029, or use the live chat on moneytalks.co.nz. Financial mentors can help with budgeting and debt, and they can connect you with a free budgeting service in your area. Opening hours differ between sources, so check the website for the current times.
- Christians Against Poverty (CAP) Debt Help. A free service that works through a personalised budget, contacts your creditors and supports you until the debts are cleared. Its helpline is 0508 227 111. It does not pay your debts for you.
- Citizens Advice Bureau. Your local bureau can help you find free budgeting advice and explain your rights about money and debt.
- Good Shepherd. Offers a debt programme that includes coaching and, for those who qualify, a loan to consolidate debts. Eligibility rules apply, so ask before you count on it.
- Work and Income. If you owe money to Work and Income, it can help you set up repayments you can manage. See its page on debt for what applies to you.
If you are not sure which to pick, start with MoneyTalks. The mentor you speak to can tell you which local service fits.
Start with the lender you owe
Before you do anything formal, contact the lender you are behind with. Consumer Protection explains that many lenders would rather change the repayments than chase missed ones. Options include more time to pay, a smaller payment over a longer period, or a short repayment holiday. A new arrangement can cost more in interest and fees, so ask what the total will be.
There is also a formal hardship request. It is meant for an unexpected event such as job loss, serious illness or a relationship breakdown. Consumer Protection says you must be less than two months behind, so apply early and in writing, saying which change you want. The lender has 20 working days to give a decision and reasons, it cannot charge a fee to consider the request, and it has to pause repossession until it decides.
If the lender does not review your request fairly, you can complain to its dispute resolution scheme. Our guide on struggling to pay your car loan goes through this for car loans in particular.
The formal options
Where informal arrangements are not enough, the Insolvency and Trustee Service sets out three formal options. In short:
| Option | Who it suits | Key point |
|---|---|---|
| Debt repayment order | Owe less than $50,000 in unsecured debt and can make some repayments | A repayment plan that gives you more time |
| No Asset Procedure | Owe less than $50,000, have no assets and no spare money for repayments | Clears the debt; creditors do not receive the money |
| Bankruptcy | The only formal option above $50,000 of debt; you can be made bankrupt if you owe more than $1,000 in unsecured debt | Clears the debt but affects your life significantly |
There is also a proposal, which is a formal agreement with your creditors that a court must approve. You need a lawyer or accountant to draft it.
These steps are serious and have lasting effects, so take free advice before you choose one. A mentor, a Community Law centre or the Insolvency and Trustee Service can explain how each would apply to you.
Fair Finance does not help current bankrupts. We only help after a bankruptcy is discharged or after a No Asset Procedure has ended. Our pages on car finance after a No Asset Procedure and discharged bankrupt car finance explain what comes next.
Debt management plans and consolidation
A debt management plan combines your debts into one plan. You pay into it and it pays your creditors. The Insolvency and Trustee Service suggests getting help from a budgeting service, a Community Law office, or a lawyer, accountant or insolvency specialist. Creditors do not have to agree, so a plan can fall over if a creditor says no.
Two cautions:
- Ask about fees. Free services charge nothing. Some commercial providers charge, and that money comes out of what would otherwise reach your creditors.
- Consolidation is only worth it if the total cost falls. Sorted explains that one new loan to repay several debts could lower your costs if the rate is lower. Check the fees and the full amount repayable first. If the loan runs for longer, you may pay more overall even at a lower rate. And a consolidation loan is a new debt, so it should not be taken to fund more spending.
Our page on car finance on a debt management plan covers how lenders view a plan that is already running.
What this means for a car loan
Lenders must make reasonable inquiries to be satisfied you can repay without substantial hardship. In practice, they look at your income, your living costs, your existing debts and your credit file. So debt help changes your application in three ways.
- Your commitments are visible. Existing repayments reduce what you have left each week, which can limit the loan a lender will consider.
- Your history is visible. Missed payments, defaults and court judgments stay on a credit file for a set time. Our guide to how long defaults stay on your file explains the timeframes.
- Your pattern matters. Months of on-time payments on an arrangement show something that a lender can weigh up. Paying on time is one of the best things you can do for your file.
There is no fixed waiting time. Lenders decide case by case, and nobody can promise approval. If you want a view of where you stand, see our page on bad credit car finance.
A worked example (illustrative numbers only)
Say your take-home pay is $900 a week and your bills come to $700, which leaves $200. You also have a $60 a week repayment on a store card that is overdue.
- Ring MoneyTalks and ask for a budget. The mentor may find a few savings and contact the card provider about a lower repayment, say $40 a week.
- That leaves about $160. A used car costs money to run. If you set aside $60 for petrol, rego and servicing, around $100 is left for any loan.
- At an illustrative 14 percent over four years, a $5,000 loan costs roughly $32 a week, and a $9,000 loan about $57 a week. Both leave a margin, but the tighter the margin, the harder a lender will look.
These numbers are made up to show the method. Use the repayment calculator to test your own figures, and keep a buffer for car repairs.
Red flags
- A fee up front. Anyone asking for payment before they have contacted a single creditor deserves questions.
- Pressure to take a new loan to clear old ones. Compare the total cost first.
- A promise to wipe the debt. Only formal processes clear debts, and they have consequences.
- A payday or high-cost loan to cover repayments. Sorted advises treating a payday loan as an emergency and clearing it as soon as possible.
- An unregistered lender. Check the Financial Service Providers Register before you borrow.
- A car loan offered with no question about your budget. A lender must check that you can afford it.
How Fair Finance helps
If you have talked to a mentor and your budget shows room for a car, Fair Finance can help with the next step. You complete one online application and we run one soft credit check, which does not affect your score. We then pass your details to a panel of approved New Zealand lenders. Each lender decides case by case, and nobody can promise approval. We are paid by the lender only if a loan settles, and that never changes your rate. Start with the quick check.
Checklist
- Called MoneyTalks or another free service
- Listed every debt, its balance and what you pay
- Contacted any lender you are behind with
- Asked about total cost and fees before any new loan
- Checked your free credit reports from Centrix, Equifax and Experian (formerly illion)
- Set a weekly car budget that includes running costs
- Kept a buffer for repairs
General information only, not financial advice. Services, thresholds and rules change, so check the official pages below.
Sources
Common questions
Where can I get free debt help in NZ?
MoneyTalks is a free national helpline run by FinCap, on 0800 345 123 or by text on 4029. Christians Against Poverty runs a free Debt Help service, and your local Citizens Advice Bureau can point you to a budgeting service near you. Free services should not charge you to set up a budget or talk to your creditors.
Will asking for debt help stop me getting car finance?
A free chat with a financial mentor is not recorded on your credit file. What matters to a lender is your repayment record, any defaults or court judgments, and what you can afford now. Some formal options, such as a debt repayment order or bankruptcy, do show up on your file, and the details are below.
Should I take out a car loan to get out of debt?
Usually not. A car loan adds a new repayment and a new debt secured against a car that loses value. If a car is essential for work, talk to a free mentor first, so the loan fits a plan that covers the debts you already have.
Can I get car finance while paying off other debts?
Sometimes. A lender has to check that you can repay without substantial hardship, so they look at your existing repayments as well as your income. A debt that is being paid on time under an arrangement looks different from one that is overdue, and lenders decide case by case.
Is a debt management plan the same as a debt repayment order?
No. A debt management plan is an informal arrangement, often run by a budgeting service or a commercial provider, and creditors do not have to agree. A debt repayment order is a formal option through the Insolvency and Trustee Service, and it is for people who owe less than $50,000 in unsecured debt and can make some repayments.
Do debt help services cost money?
The services listed on this page are free. Some commercial debt management providers charge fees, so ask what the full cost is and what you get for it before you hand over any money. A fee that is taken before any creditor is paid is a reason to stop and ask more questions.
See your repayments, then get a fair rate.
One application, one soft credit check, no obligation. We match you to the lender most likely to give you a fair go.