In New Zealand, securing loans without traditional income is possible through secured loans using international shares as collateral, peer-to-peer lending with flexible criteria, credit unions' leniency, and private lenders or familial sources. However, careful evaluation and financial advice are crucial due to associated risks.
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“Where can I loan some money without having an income? I have a lot of money in international shares, so making repayments is not a problem; the banks will only lend money to people with an income.”
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It’s important to note that the availability of loans without income may vary depending on your specific circumstances and the policies of financial institutions in New Zealand. Here are a few options to consider:
Secured Loans:
If you hold a substantial amount of money in international shares, you may be able to secure a loan using these shares as collateral. This type of loan is known as a secured loan. Lenders are often more willing to provide loans when valuable collateral is involved. In this case, your international shares serve as a guarantee for the lender, ensuring that they can recoup their money by selling the shares if you fail to repay the loan. However, it’s essential to be aware that you’re putting your investments at risk, and market fluctuations can impact the value of your collateral.
Peer-to-Peer Lending:
Some peer-to-peer lending platforms in New Zealand operate with more flexible lending criteria than traditional banks. They may consider your investment portfolio and assets when assessing your eligibility for a loan. While they might not require a standard income source, they will look at your overall financial situation and your ability to repay the loan. It’s essential to research these platforms and understand their specific requirements.
Credit Unions and Non-Bank Lenders:
Credit unions and non-bank lenders may have more lenient requirements compared to major banks. They could take into account alternative sources of income, such as your investment portfolio when evaluating your loan application. These institutions often focus on a more personalised approach to lending, which can work in your favour if you have substantial assets.
Private Lenders and Alternative Sources:
You can also explore private lenders or consider borrowing from friends and family who have the financial means to assist you. Private lenders might be willing to work with you based on your assets and investment portfolio, but it’s crucial to formalise any personal loans with a legally binding agreement. When borrowing from family or friends, maintain clear communication and formalise the arrangement to prevent misunderstandings.
In all cases, it’s imperative to assess the terms and conditions of any loan offer thoroughly and ensure that you have a robust plan for repayment, even if the value of your investments fluctuates. Borrowing against assets carries some risk, as you may lose those assets if you can’t meet your obligations. Seeking advice from a financial advisor or legal expert is highly recommended to make well-informed decisions tailored to your specific financial situation.
Hope this helps.
Regards, Clive Fernandes (Financial Adviser)
Director – National Capital
Disclosure: I am the director of National Capital, a KiwiSaver advice firm. The views expressed in this article are the views of the author. The information provided is of a general nature and is not intended to be personalised financial advice. You may seek appropriate financial advice from a Financial Adviser to suit your individual circumstances or contact National Capital.
