Families on regular incomes are doing it tough right now.
This is no secret, with media reports frequently highlighting the financial distress many people are experiencing.
A recent report compiled for Kore Hiakai Zero Hunger Collective shows that families in Auckland earning the median wage are, on average, more than $40 worse off per week than they were in 2023.
The report shows that for an Auckland family consisting of 2 parents and 2 kids, about 40% of their income will go on housing, and another 30% on food.
That doesn’t leave much room for everything else!
When you add in other essential costs like health, insurance, education and transport, you can see why it’s so hard to make ends meet.
The role of debt in taking up your disposable income
As if taking care of the bare essentials wasn’t difficult enough, throw in a few loan repayments and it can seem like there’s just no way you can get on top of it all.
Many Kiwis are paying far too much in interest on their loans, which makes them unaffordable.
More than 450,000 people are behind on their credit payments, which shows you that the problem is relatively widespread.
During times like this, when finances are extremely tight, it can be easy to put loan repayments on the back burner while you take care of more essential things, like buying food and paying rent.
But it’s important not to neglect your obligations, as the consequences of falling behind can be catastrophic for your credit score, and therefore your ability to take out credit in the future.
How to reduce your loan repayments
At this time of year, with Christmas just on the horizon, the last thing you need is to be stressed about meeting your loan repayments.
Instead of skimping on life’s essentials, a much better way to get on top of debt is to structure your loans so you pay less in interest.
The best way to do this is with a debt consolidation loan.
A debt consolidation loan with Loan Direct combines all of your debt into one low-cost loan. Payments are easier and interest rates can be lowered.
If you do this, you can simplify your finances and make life a bit easier since you’ll only have one monthly payment to handle instead of multiple payments.
It’s easier to plan your monthly budget when this loan has a set rate and repayment schedule.
The importance of the right loan structure
If you opt for a loan with a shorter repayment term, your monthly or weekly payments will be higher. While this approach can reduce the total interest paid over the life of the loan, it can also lead to financial strain and increase the risk of missed payments. Missing payments can damage your credit score, affecting future borrowing options and interest rates.
This is why when you apply for a debt consolidation loan through Loan Direct, we work with you to find a loan structure that works for you.
By spreading your repayments out over a longer period of time, we can help you free up some income to spend on other things.
Here’s an example from one of our clients: Shaun had a large $33,000 loan at a high interest rate, and he was paying so much in repayments that he couldn’t afford to live well.
Loan Direct was able to pay off his loan, plus arrange an extra $10,000 cash to help him tie up some loose ends.
The new $43,000 loan had a low interest rate of 18.45%, a lot less than he was paying before. His new weekly loan repayments were $260, a whopping $840 less than he was paying previously!
At Loan Direct, we love helping people like Shaun enjoy their lives more by reducing their loan repayments.
If you want to pay less for your loans and free up more disposable income, get in touch with our friendly team today for a free chat about your financial situation.
