Struggling with repayments? Your options

First: this is common, and the law is on your side

Incomes drop, hours get cut, life happens. NZ consumer credit law assumes exactly this, which is why the Credit Contracts and Consumer Finance Act gives borrowers a formal hardship process and requires lenders to engage with it. The worst move available is silence. Every good option below works better the earlier you start it.

Option one: talk to your lender (the hardship application)

If unforeseen hardship (illness, injury, losing work, a relationship ending) means you can't reasonably keep up the repayments, you can apply to your lender for a hardship variation. They must consider it. The usual shapes:

• A payment reduction: the term extends and each repayment shrinks to something your current budget carries;
• A payment holiday: repayments pause for an agreed period, with the loan extended to catch up afterwards; or
• A combination: a short pause, then reduced payments.

Doing it well is mostly doing it promptly:

1. Apply in writing and use the word "hardship". It engages the formal process.
2. Say what changed and what you can realistically pay now.
3. Apply before you're deep in arrears: your rights are strongest while the account is in reasonable shape.
4. Keep paying what you can in the meantime; it shows good faith and slows the arrears.

Interest usually keeps accruing through a variation, so the loan may cost more in total. The point is to make it survivable now. If the lender declines, ask for written reasons and escalate to their dispute resolution scheme, which every NZ lender must belong to and which is free to use.

Option two: MoneyTalks (free financial mentors)

You don't have to run this process alone. MoneyTalks is New Zealand's free, confidential financial helpline: trained financial mentors who can look at your whole budget, help you write the hardship application, negotiate with lenders alongside you, and deal with any other debts in the same conversation. Call 0800 345 123 or visit moneytalks.co.nz. There is no catch and nothing being sold. If repayments are keeping you up at night, this phone call is the single best next step on this page.

Where refinancing fits, and where it doesn't

Refinancing means replacing your loan with a new one, and it belongs in this conversation in one case only: your current loan is genuinely expensive, and a cheaper loan could exist for your file. If the loan came from a car yard with a padded rate and add-ons bundled in, a cleaner loan on the same balance could lower the repayment without stretching the term, depending on your circumstances and the lender's assessment. The savings calculator shows what a 1% or 2% lower cost does to a repayment; any break fee belongs in that maths too.

Where it doesn't fit, and we'd rather say this plainly:

• If the debt is unaffordable at any reasonable cost, a new loan doesn't change that. A refinance also has to pass the same CCCFA affordability test, and papering over a budget problem with new credit makes the problem older and bigger.
• If the only way to lower the repayment is stretching the term a long way, you're trading a smaller payment now for more cost overall. Sometimes that trade is worth it; it should be made with open eyes, ideally with a MoneyTalks mentor looking at the whole budget.
• If what's on offer is a top-up rather than a refinance (extra borrowing on top of what you owe), that's a different product going the wrong direction. The difference matters: refinance vs top-up.

What not to do

• Don't ignore it. Missed payments become defaults, defaults become repossession processes, and every step down costs more to climb back from. Your options are widest today.
• Don't roll the arrears into high-cost debt. Payday advances, truck-shop credit, or a desperate consolidation at a worse price turn one manageable problem into two unmanageable ones.
• Don't quietly sell the car without checking the payout figure. The loan is secured on it, and selling for less than you owe leaves debt with no car behind it. Get the payout figure from your lender first.
• Don't go silent on your lender. Every protection in this guide works through communication; none of them work through avoidance.

A sensible order of operations

1. Today: call MoneyTalks on 0800 345 123 and be honest about the whole picture.
2. This week: put a hardship application to your lender in writing, with your mentor's help if you want it.
3. Once things are stable: check whether the loan itself is the expensive part, and only then, if it is, see whether refinancing to a genuinely cheaper loan could help.

Leverage Finance is a lead-generation referral service, not a lender. All lending decisions, rates, and terms are determined by the lender assessing your application. Nothing on this page is financial advice. It's general information about how refinancing works.