Microfinance

Microfinance

A microfinance loan is either a no-interest loan, or a loan with a very low interest rate, but generally it is only available for a small amount, and for specific purposes. People with low incomes can use microfinance credit to break the cycle of high-interest finance and get themselves out of debt or purchase essential household goods.

 

While there are no fees and no, or little, interest charged on microfinance loans, there are conditions that have to be met in order to qualify for the loan. They are designed to help a household to avoid high-interest debt for household necessities, and aid applicants to achieve financial independence.

Microfinance isn’t a bank loan or a payday loan. We work with two charitable organisations in New Zealand, that provide microfinance:

Debtfix

Ngā Tāngata Microfinance has three types of loans available. For all their loans the following apply:

  • No interest charged

  • No fees charged

  • You repay the loan over 2 years

  • You get advice and support from a financial mentor on how to get ahead with money
    1. Get Control Loan - up to $3,000 to pay off high-interest debt you already have

    2. Get Ahead Loan - up to $2,000 to pay for an essential item such as a fridge, school fees or medical fees (car purchases aren’t covered).

    3. Get Set Combo Loan - up to $3,000 to pay for an essential item up to $2,000 e.g. new whiteware and a laptop, and $1,000 to pay off debt (excl. car purchases).

Good Shepherd New Zealand was created to support women and girls experiencing disadvantage and hardship, by providing no interest and low interest loans. They provide the:

  • Good Loans programme - designed to give you a helping hand whilst improving your long-term financial wellbeing. The loans are up to $7,000 and can be used for second-hand cars, car repairs, new household appliances, computers, course costs or medical expenses.

  • DEBTsolve programme - this combines debt coaching, advocacy and debt consolidation loans of up to $15,000 to help with unmanageable debt.

    Loans provided under these programmes are interest free and have no fees or charges.

    Both these programmes provide an alternative to third-tier lending and reduces the risk of high interest. Good Shepherd is not-for-profit and community-based – making it a fair option for a loan.

    You will need to work with a financial mentor when applying for a loan with either of these organisations.