First published on
Through Wyatt Ryder
Other stories emerged detailing the effects of tough new loan changes, including a woman who was asked about her social life, work and spending down to the dollar.
Changes to the law on credit agreements and consumer credit came into force in early December, requiring banks to analyze the spending habits of applicants before approving loans.
The changes were intended to protect vulnerable borrowers from loan sharks, but many found the new processes obstructive and unnecessary.
One woman, who did not want to be identified, said the process of getting a loan was invasive.
She was looking for a loan under $10,000 to help pay for her emergency medical bills.
She went to ANZ because it had the best rate for her, but was referred to a manager, who decided the loan was not affordable for her, she said.
Nothing but a cursory explanation was given for the refusal.
In the past, she had received a similar loan without problems, despite her worse financial situation.
Following the refusal, she approached the Co-operative Bank for the loan.
She had to specifically analyze her spending habits, with the bank demanding explanations for discrepancies as low as $5.
The bank inquired about her social life, her hobbies and how much she spent on parking.
“Sometimes I get my eyebrows waxed, I had to explain to him in detail how often it happens.
“Every transaction has been analyzed and questioned.”
Although she is an employee, she had to show the bank her employment contract to prove her employment.
She also had to write a detailed summary of her work to accompany it, she said.
The workers were “extremely sorry” about this, but she didn’t think many of the questions were relevant.
As part of the process, the bank asked her if she was interested in life insurance, which she agreed to pay for.
During this process, she was asked for in-depth details about her medical history, such as the exact circumstances that led her to develop post-traumatic stress disorder.
Once this process was complete, she was told that the weekly $2 fee for insurance could mean her loan was no longer accepted.
The loan was eventually approved, but the experience put her off considering a loan in the future and made her think twice about buying a house, she said.
“The whole process was overwhelming.”
Others shared their experience on Facebook, saying they were asked about spending on doctor’s visits, prescriptions, charitable donations and simple luxuries.
One user said he was told by a financial adviser to drop all extra expenses, such as his Netflix subscription.
Another called the new process demeaning and destructive.
Many users pointed out the importance of using cash, as it was untraceable and could help bypass the system.
This story first appeared in the Otago Daily Times