Turning bad debts into good habits

Three ladies by a car boot, filling it to the brim with sporting goods and a kitchen sink.

Director of Retail and Marketing Paul Carter shares how BNZ’s Community Finance programme helps people be good with money so they can do great things with it. Not just through the low-interest loans, but also through the conversations held.

It’s Money Week and the official theme is “What does debt do for you?”.

This got me thinking about what debt has done for me and my family.

Debt is an everyday part of life. It allows you to purchase an asset like a house or a car, which you otherwise might not be able to purchase straight away, and can help with education, employment and your plans for the future.

It is not necessarily something to get stressed about, but many people do get emotional about it. They worry about the level of their debt, the type of debt, or whether they can take on more debt so they’re able to purchase something they’d like.

It just goes to show how important it is for us to help people improve their financial literacy.

I’m convinced that the more people understand about borrowing, the easier it is for them to manage their debt and make good decisions about it.

Over 2,000 conversations

One of the ways BNZ supports people with financial literacy education is through the Community Finance initiative, a partnership with Good Shepherd New Zealand, the Ministry of Social Development, and community providers like the Salvation Army and Aviva.

With Community Finance we provide fair and affordable low-interest loans to those people in our communities who need them the most. The loans are able make a real difference: they enable participants to buy the assets they need to improve their quality of life.

This month we commemorate Community Finance’s third anniversary and celebrate the fact that our loan workers have had over 2,000 financial conversations with applicants. The foundation of the programme is to help people advance their personal situation and the loan workers help them through that process.

Sometimes we find that we can’t offer people a loan due to the amount of debt they already carry. In those cases, our loans workers talk them through the things they can do to get themselves into a better financial position.

What debt does for them

And we’re pleased to see that in many cases those conversations have given applicants the means to advance their situation and meet the affordability criterial some months later.

Community Finance is not just about providing loans – it’s also about helping people become more financially savvy, regardless of whether they take out one of our loans or not. And when they do, the debt improves their lives in many ways.

For one person, having the ability to buy a reliable vehicle allows them to get their family to where they need to be without relying on others. For another, it means being able to buy dining room furniture without the burden of exorbitant debt repayments.

The scheme is currently being offered in Rotorua, Invercargill, Wellington, Whangarei, Palmerston North, Hawkes’s Bay, Waitakere, Manukau, Mt Wellington, Christchurch and Hamilton. This week, during Money Week 2017, the programme will launch in Tauranga.

For the Community Finance programme, debt offers the possibility to improve the quality of life for many while opening up the important conversation about being good with money so you can do great things with it.