Work visa expires before loan is repaid
Insights for consumers
If you are in New Zealand on a working or other long-term visa and borrowing money, think about whether you will pay off your loan before your visa expires.
Insights for participants
When arranging loans for borrowers in New Zealand under international visas, it’s important to discuss how the loan term aligns with the length of their visa, and what this may mean for their repayments. This may include asking the borrower whether they intend to extend their visa term, in which case, it may be appropriate for the loan term to exceed the visa term.
International visa holder takes out car loan
Caitlan* was granted a three-year Accredited Employer Work Visa in January 2023. Caitlan was required to work for a specific employer and to leave New Zealand before the visa expired in January 2026.
In March 2023, Caitlan borrowed $18,000 to buy a vehicle. Her final payment was due in March 2026.
Caitlan thought the loan was unsuitable
Caitlan said the lender did not comply with the Credit Contracts and Consumer Finance Act 2003 (CCCFA), which requires a lender to make reasonable enquiries to be satisfied that the credit will meet the borrower’s requirements and objectives, before entering into an agreement. Caitlan argued that a loan with a term longer than her visa was not suitable because it extended beyond her legal right to stay in New Zealand.
Caitlan complained to Financial Services Complaints Limited (FSCL). Caitlan said that when she took out the loan, she anticipated leaving New Zealand by January 2026. She thought the lender should write off all interest and fees that were added to the loan.
Why the lender thought the loan was appropriate
The lender said that the loan was suitable and met Caitlan’s requirements and objectives. Her work visa was specifically designed as a pathway to residency; she had been employed by an accredited employer for over a year on a previous work visa; and had a three-year old credit file. As a result, the lender was confident that Caitlan’s current visa would be extended.
Caitlan signed off on the loan term
The lender said that approving loans with terms beyond the expiry dates of accredited work visas is standard responsible practice for borrowers with established work records. They added that the loan meant Caitlan had a vehicle to travel to work, and that she had signed the contract, which included the loan term.
FSCL view: the loan term should have been discussed
After reviewing the lender’s file, and section 9C(3)(a)(i) of the CCCFA, and Regulation 4AA(c) of the CCCF Regulations 2004, we found that the lender should have discussed the loan term with Caitlan, including asking her if she intended to stay in New Zealand beyond her visa term, and whether she thought she would be able to extend her visa.
There was no evidence that the lender had asked Caitlan if she thought she would leave New Zealand by January 2026.
We also considered that if the lender had asked these questions, it would have become clear that Caitlan did not know she would still have a loan balance owing after her visa expired in January 2026. The lender and Caitlan would likely have agreed to a different loan structure, such as increasing her regular payments to reduce the loan term — something her budget allowed.
A settlement offer both sides accept
We decided that Caitlan’s complaint about the lender should be settled because the lender had not adequately inquired into Caitlan’s requirements and objectives regarding the loan term and its relationship with her visa term. However, we decided it would be unfair for the lender to write off fees and interest (the usual CCCFA remedy) because we understood Caitlan intended to extend her visa, had received the benefit of a car loan, and could afford to pay her loan.
By way of settlement, the lender offered to waive the final 11 payments on Caitlan’s loan. Caitlan accepted the offer, and we closed our file.
