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From Sleepless Nights to Financial Freedom: Tackling Consumer Debt
•Zebunisso Alimova
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Drowning in debt doesn't have to mean the end of your homeownership dreams. Our latest conversation tackles the often overwhelming challenge of high-interest consumer debt that keeps many New Zealanders up at night.
We've seen it all—car loans with eye-watering 20-25% interest rates, cultural obligations creating financial strain, and predatory lenders taking advantage of desperate situations. One client's story particularly stands out: when his car unexpectedly broke down, he faced a 15% interest rate from a predatory lender. Once they learned he was working with us, they dropped to 12.5% (we still secured 9.5%). This real-world example demonstrates how vulnerable consumers are when making urgent financial decisions.
The impact of these high-interest loans goes beyond monthly budgets. Many mortgage lenders view substantial car payments as red flags, effectively placing homeownership out of reach. By refinancing these debts, we've helped clients save $200-300 monthly—often the exact difference needed to qualify for a home loan. We've even consolidated debts up to $80,000, transforming seemingly impossible situations into manageable pathways forward.
What makes our approach different is understanding that debt doesn't always stem from poor choices. For many Pacific families, cultural obligations like international travel for funerals create unavoidable financial burdens. We offer solutions without judgment, focusing on practical steps forward rather than looking backward.
Are you struggling with debt that's keeping you from achieving your financial goals? Or do you know someone who needs help escaping the high-interest trap? Reach out today—while we can't promise miracles for everyone, we might just have the solution you haven't considered yet.
Hello , and welcome back to that Home Loan Hub . If you've got a lot of debt and you can't sleep at night , this is the episode for you . So please listen up .
Yo James , we have few clients at the moment that come to us after lots of sleepless nights because they've got so much debt , they got themselves into a bit of a trouble and they just don't know if it's possible for them to even buy a house . What are we doing with them ? Let's dive in .
Speaker 2
Okie dokie . Yes , it's really interesting the range of debt that people can build up that we can help with .
What I am seeing is a lot of personal loans for cars . What I am seeing is a lot of personal loans for cars and they seem to you know that's the most common one and they're on really high interest rates . So that can really be a drawback when you're trying to go for a mortgage . So what we're having to do with many of these clients because they've locked in quite high interest rates with a , would you say , second tier lender or low-end lender um , we can get that debt at a much cheaper rate for them and then through one of our lenders , so we can take their personal loan . You know they might be paying 20% interest on for their car .
Speaker 2
We can go to one of our lenders with that personal loan and just recently we've had one just under . We've taken it from 20% to 10% interest rate or 9.9 . And we've had another one from 15% to 9.5 .
Speaker 1
And the saving is massive , right Like they will be saving themselves $200 , $300 per month in their payments and that sometimes is the difference between whether you can buy that house or not .
Speaker 2
It's incredible the difference the lenders look at this situation with these huge car loans and high interest rates and it's just a no look at this situation with these huge car loans and high interest rates and it's just a no . They're not interested in lending against when you're basically paying a mortgage on a car .
Speaker 1
So we have to do a bit of tidy up work before the clients are ready . And yeah , so the
car loans , the credit cards , all sorts of different purchases that they would have made over the years , and the biggest loan we've consolidated recently is $80,000 .
Speaker 1
Wow , you know and that's incredible to think that the consumer debt is growing and unfortunately , people find themselves in those positions and look , some of them were outside of their control . Yeah , some of them , you know , had a family member die and we see this a lot in our Pacifica community , where someone died and they have to attend a funeral and usually when they go to the funeral you can't just go by yourself . You have to bring your whole family and they might be traveling to Tonga some more and it's the ear flights and then they're also expected to chip in for the funeral .
Speaker 1
They can't just arrive with no money . So often they put themselves in a dead position . They're also expected to chip in for the funeral . They can't just arrive with no money . So often they put themselves in a dead position to provide for their families . And it's a cultural obligation that we all understand , because I'm from a culture where you have to show up for your family when something happens . So there's zero judgment whatsoever when people get themselves in that position , but there is 100% support of how can we help them to get out of that hole . Because often when people are stressed and it's a stressful situation they find themselves going to lenders that wouldn't give them the right rates and charge them a numb in the leg , like you say . You know they might charge them 25% , 20% .
Speaker 2
They're taking advantage of that situation of the clients and then you know Absolutely that's what I'm seeing , and I just had a great case recently where I told him before because he was looking at his family , we're looking at buying a property and I said to them before you , any major purchases that you were planning on doing , you make sure you come and check with me first . Unfortunately , his car blew up so he had to get a new car , but he went to a lender and they were going to charge him 15% Oof 15% . But as soon as they realized that they were talking to us , they dropped the interest rate to 12.5% .
But you can just see the predatory lending that's out there , taking advantage of people .
Speaker 1
And he would have taken 15% .
Speaker 2
He would have absolutely .
Speaker 1
Because he's desperate , he needs to get from A to B , he needs to go to work every day .
Speaker 2
It's a big trip every day . He has to do Exactly , and that's what's happened with previous applicants as well . So we really just would like you know people that come to us , because we are in more of a position where we're going to try and find the best deal for you rather than just smash you with a really high interest rate .
Speaker 1
That's gonna curtail any of your future plans yeah , exactly , and I think , uh , a lot of people don't realize that we don't just do home loans , we actually do personal loan , um , personal loan covers too . So , um , if you are in that position where you just think that , oh my God , this hole is too deep and I don't know how I'm going to get out of it , come and talk to us . We'd love to help you . We'd love to assess your situation and see if there is an option . And look , we can't help everyone . Sometimes there are people that we just can't help because the situation is far too gone or the bad credit is affecting the application .
Speaker 1
So it's not like we're miracle workers and we can just help everybody . No , but the moral of the story is don't just take the first deal as the best deal and if you had taken that because you were desperate , come back and review when you know the emotions are a bit out of the way , when the stress is out of the way , when you can actually think clearly and see what's the best way forward .
Speaker 2
Absolutely .
Speaker 1
Yeah , so that's incredible , james . I mean saving . You know 5% on a personal loan is huge .
Speaker 2
And it means he's still in the picture for getting a house , for getting which is their dream store . Right , they're really blown away , because not in a good way , because they were so close to getting a property and then the car blew up , but because we've got them this decent car loan situation . It means that the goal of owning their own home is still quite doable .
Speaker 1
It's just going to take a few more months . And also like instead of , for instance , overpaying 3% , 5% on his personal loan , he could actually increase his repayments by that much and smash his car loan faster .
Speaker 2
Or redirect that money , yes , into savings with the lending that we've set up for them , they can do that . The other lending they had no options but to pay it off over the whole term , otherwise there would have been a huge break fee but here you know , with the lenders that we work with , we only only work with the best
So you know it's written into the agreements that you can pay it off sooner if you want to , which is exactly , you know , with no cost . That's the key part , no cost . So that's really cool and we're really careful about that .
Speaker 1
That's awesome . Thank you , james . So so much . Absolutely insightful episode . Insightful episode . So , for those that are listening , reach out to us . If you know someone , if you know your friends that are struggling , you know , because they recently had to get into debt or buy a new car and paying too much send them our way , we'll sort them out .
