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FAQs - Borrow

FAQs - Borrow

Peer to peer lending is still a relatively underutilized investing and borrowing alternative in New Zealand. We have put together these FAQS to help you better understand the arrangement.

How much can I borrow?

The minimum amount you can borrow is $25,000 and the maximum is $2 million (within a 12 month period). The platform fee, charged by Zagga, is inclusive of this maximum and is only payable when your loan has been fully funded by investors.

How do I become a borrower?

Simple! Simply join our platform on an obligation-free basis, then register with us as a borrower.

How do I borrow money?

Once you have joined and registered as a borrower, simply follow the process to apply for a loan.

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What can I get a loan for?

You can borrow money for any legal purpose. See our What you can borrow for page for more information on the types of loans we offer.

What information do I need to provide?

You need one of the following:

  • New Zealand Driver Licence
  • NZ Passport
  • Certificate of NZ Citizenship
  • NZ Passport
  • NZ Birth Certificate
  • Non-NZ passport

You will also need to provide details of your income and expenses, assets and liabilities.

Can investors ask me questions about my loan application?

To assist with investment decisions, registered investors can ask you questions relevant to your loan application via the document portal on our website. We will forward the question to you and convey the answer back to all registered investors via the website.

You do not have to answer these however, your loan is more likely to be funded if you are honest and open as you will be more attractive as a borrower to investors, than borrowers who do not respond to questions.

Please note, when you are asked a question, it will not be displayed until you respond to and answer the question. If you do not respond, it will be recorded on the file as an unanswered question.

You must not ask for, or provide, any contact details or information that could be used to identify you or the investor. Your account may be terminated if you do so. If you have concerns about any of the above, please contact us immediately on 0800 286 286.

Who is eligible to borrow?

If you want to borrow as an individual, you must meet the following conditions:

  • be at least 18 years of age
  • have no convictions for fraud or dishonesty
  • not be bankrupt or insolvent
  • pass our credit assessment.

You can also borrow as a company or trust.

All borrowers must have a New Zealand bank account in the same name as the borrowing entity, and satisfy an AML-CFT identity check. This is to comply with New Zealand's Anti-Money Laundering and Counter-Financing of Terrorism regulations.

Zagga does not accept applications from individuals with past insolvencies or bankruptcies, nor entities that are insolvent, in receivership or in liquidation.

Is security required on all loans?

Yes, all loans made through Zagga are secured over assets, typically first mortgages over property.

Can I apply for a loan for my business or farm on Zagga?

Yes you can apply for loans for any legal purpose, including businesses and farms.

Will my poor credit rating be held against me?

Having a bad credit history will decrease the chances of your loan being approved however it may not automatically disqualify you. Zagga assesses every loan application on a broad range of factors that are not limited to credit history. This includes the value of the security being offered and the verified annual income of all applicants, as well as any explanation for a poor credit history.

Our experience shows us that applicants with bad credit histories typically have a greater risk of default than those with good credit histories so, if accepted, the borrower will be assigned a higher risk grade and have higher interest rates applied to their loan.

Zagga does not accept applications from individuals with past insolvencies or bankruptcies, nor entities that are insolvent, in receivership or in liquidation.

How long do the loans run for?

Zagga offers a range of different loans with different lengths. However, typically most loans are for 1, 2, 3 and 5 year terms. Click here to learn more about our loans.

If I apply for a loan, do I have to proceed with it?

No. Once you have completed your loan application, we will begin our credit assessment and will advise you of the outcome.

If your loan application is approved, you will be sent an email with the relevant information, including your Zagga Credit Assessment Score, the applicable interest rate and terms and conditions of the loan. At this stage, you may decide whether you would like to proceed with the loan. If you decide not to proceed at this stage, you will not incur any fees.

If you would like to go ahead with the loan, we will match you with committed investors and will instruct our solicitors to prepare the legal paperwork. If you change your mind after this stage, there may be fees payable including a Platform Fee and legal and documentation fees incurred by the Trustee. All fees and charges will be disclosed to you during the application process. Please see FAQs – Borrower / What fees do I pay? for further information.

What happens if my loan does not get fully funded?

If your loan is not fully funded within the time period specified, we will contact you to discuss your options. This may include extending the listing, adjusting the terms of the loan and relisting or withdrawing the listing altogether.

How is my loan application assessed?

We undertake a comprehensive assessment to determine your credit worthiness and the quality of your loan application. This process includes external and internal credit checks to establish your financial history, a determination that a loan meets your requirements and objectives, and assessment of your income and financial records to determine your expected ability to meet repayments.

Each loan will be graded on a variety of factors including the loan amount, value of the security property, and type of security offered. We will then advise you if your loan application has been successful, and if so, which credit grade and interest rate will apply to the loan. If you have any questions about your assessment, please email us, or call 0800 286 286.

How does Zagga verify the information I provide?

In order to verify your identity and financial situation, we may conduct checks against your:

  • bank accounts
  • credit history
  • driver's license
  • passport
  • residential address

Can I change the amount I want to borrow?

It is possible to change the amount you want to borrow, but it will depend on your situation as each loan application is assessed on its individual merits, including loan to value ratio (LVR), income and security offered. Please contact us on 0800 286 286 to discuss.

Can I change my direct debit?

Yes, you can change your direct debit details at any time. Just login to your account to make the necessary changes. Or call us on 0800 286 286 and we can sort it out for you.

What is the Zagga Credit Assessment Score?

We calculate a borrower's credit score from a credit check and the information supplied in the loan application along with the loan to value ratio of the security offered. This includes a borrower's credit history, their income and expenditure, an assessment of their likelihood of default and the security valuation. The Zagga Credit Assessment Score assigned to a borrower is the basis for the interest rate they will pay on a loan.

What happens after my loan is approved?

If your loan is approved, you will be sent a loan offer in which we will advise you of the interest rate and terms and conditions of the loan. You will have the opportunity to review and either accept or decline the loan offer.

If you accept our loan offer and sign the Borrower Agreement, we will place your loan on our platform and attempt to match you with committed investors who are ready to fund your loan and will instruct our solicitors to prepare and send the legal paperwork to your solicitor for execution by you. Should you then withdraw from the loan any time between accepting our loan offer and your Borrower Agreement, and the date on which the loan is settled, you will be liable for payment of fees. Please see FAQs – Borrower / What fees do I pay? for further information.

Why was my loan application declined?

There can be many reasons why your loan application was declined, including your expected ability to service the repayments, your credit history and the value of the asset(s) offered as security. You may not have provided us with all, or the correct information, to make a proper assessment. If you feel that to be the case, please contact us on 0800 286 286.

Can I withdraw my loan application?

You may withdraw your loan application at any time provided it has not been fully subscribed by investors. You may do this by logging into your account and deleting the relevant application. No fees will be charged for withdrawing a loan application at this stage. However, if you withdraw your loan application once it has been fully subscribed by investors and awaiting settlement, you will be charged a Platform Fee to cover our processing expenses, and any legal and documentation fees incurred by the Trustee. Please see FAQs – Borrower / What fees do I pay? for further information.

Will investors see my personal information?

On the public pages of the website only generic information about your loan is available. This includes the loan amount, type, location, credit score and interest rate. Registered investors however have access to further information; how much information is dependent on the level of disclosure you select when applying for the loan.

Generally, the more information you choose to disclose the more likely investors are to lend to you and the lower your interest rate will be. Investors are more likely to commit funds to loans and borrowers they feel well informed about and most comfortable with. Investors must comply with our strict non-disclosure requirements. Zagga takes non-disclosure very seriously and will delete the accounts of investors who do not comply, and pursue prosecutions against them. The three levels of disclosure borrowers may select are:

1. Disclosure
Borrowers' names are disclosed to registered investors. All supporting loan documents are released to registered investors, but borrowers' addresses and contact details are removed. Borrowers who select disclosure are more likely to attract investors and receive a lower interest rate.

2. Partial disclosure
Borrowers' names are not disclosed to registered investors. All supporting loan documents are released to registered investors, but borrowers' names, addresses and contact details are removed. Borrowers who select partial disclosure are less likely to attract investors and incur an additional 0.5% on their interest rate.

3. Anonymous
Borrowers' names are not disclosed and no supporting loan documents are released to registered investors. Registered investors receive instead a basic loan summary. Borrowers who select anonymous are much less likely to attract investors and incur an additional 1.0% on their interest rate.

Please note that borrowers' contact details, including telephone numbers, email addresses, and place of work are never released to investors

What interest rate do I pay?

Interest rates differ from borrower to borrower, and loan to loan depending on the Zagga Credit Assessment Score and the loan purpose.

The Zagga Credit Assessment Score is an alpha + numeric grading system that we assign to borrowers based on the loan specifics and the information they have provided – the better the credit history, the better the credit score and the better the interest rate on the loan. If the credit history is not perfect, or the loan to security value ratio (LVR) on the loan is high, the Zagga Credit Assessment Score will reflect this resulting in a higher interest rate to meet the higher risk.

For detailed interest rates, please refer to Borrower rates and fees.

What fees do I pay?

Our platform is designed to enable people to borrow money from other people. Our platform fee is charged to borrowers who list their loans on our platform and are successfully funded. If a loan is not fully funded then a platform fee is not charged. The platform fee is 1 – 7% of the loan amount and is based on a borrower's credit score. Borrowers have the choice of paying the platform fee from their own funds or adding the fee to the total amount of the loan. This fee is payable to Zagga when the loan is settled.

When the loan is settled borrowers will be required to make regular loan repayments. If borrowers are late with these repayments they will be charged penalty interest and additional fees will apply. Read more about our fees and charges here.

Can I repay my loan early?

Yes, you can, however you may be subject to an Early Repayment Fee. Please refer to the Borrower Agreement for more information, or call us on 0800 286 286 to discuss.

What happens if Zagga goes into liquidation?

Zagga is required by the Financial Markets Authority (FMA) to have a plan in place in the unlikely event of Zagga going into liquidation. In this scenario, a third party would be appointed to oversee the administration of all existing loans. For borrowers, nothing would change. You would still be required to meet your repayments and commitments as per usual.

Can I change the terms of my loan?

No, once your loan is settled and active you cannot change its terms.

Can I change my repayment dates?

No, your repayment date will be on the same day each month, based on the date of the initial loan advance. However, if you are struggling to make repayments we urge you to contact us immediately on 0800 286 286.

How many loans can I have?

You can apply for more than one loan, and may make loan applications in different entities in which you are a party, say, a Family Trust. However, every loan application is treated on its merits and must be secured by eligible assets.

Your overall financial position and expected ability to service each loan will be carefully scrutinised and Zagga will include its determinations in your credit score, the interest rate and Platform Fee assigned to each loan.

It is unlikely that you will be approved for multiple, concurrent loans.

What happens if I make a late repayment or miss a repayment?

We take a proactive attitude to managing repayments. In the days prior to a repayment we will contact you to remind you that it is due. If you can't make a repayment on the due date you must contact us immediately. If you miss a repayment we expect you to pay it as soon as possible. As long as you make up this repayment quickly it will not affect your credit record.

You will be charged default interest on any repayments that becomes overdue. Other fees and charges may also apply. If you don't pay the amount owed or continue to default on your repayments, we will send your account to our debt recovery team who will rigorously pursue the debt.

Zagga may take legal action against you to recover the debt. This may include the sale of the security held by the appointed trust and obtaining judgement against you.