Insights for consumers
If you are in New Zealand on a work or other long-term visa and plan to borrow money, think about whether you will be able to repay the loan before your visa expires.
Insights for participants
When arranging loans for international visa holders, compare loan terms against the length of your visa. Discuss repayment implications and ask about potential visa extensions. If the borrower intends to extend their visa term, it may be appropriate for the loan term to exceed the current visa term.
International visa holder secures car loan
Linda* was in New Zealand on a work visa. In August 2024, she bought a car on finance from a lender. The loan amount was around $25,000 and was due to be repaid in July 2029. Linda’s visa was due to expire in June 2026.
Linda thought that the loan was unsuitable and should not have been approved, as there was no guarantee her visa would be extended beyond 2026. Linda complained to Financial Services Complaints Limited (FSCL).
Linda thought it was unreasonable that her loan couldn’t be repaid before her visa expires
Linda said that the lender had breached their responsible lending obligations by approving a loan that extended beyond the expiry of her visa, and by not clearly explaining the loan terms and conditions to her. Linda said the lender should waive all fees and interest under the loan and compensate her for stress and inconvenience.
Lender thought Linda would extend her visa
The lender said that Linda’s loan was suitable. She had stable employment, an acceptable debt-to-income ratio, proven financial management skills (through a credit history check), and a Green-List occupation rating — meaning she had strong prospects of staying in New Zealand. Linda also needed a car for work.
The lender explained that Linda had completed all the loan documents without assistance, had managed multiple credit facilities for more than a year, was proficient in English, and had received all the documents required under the Credit Contracts and Consumer Finance Act 2003.
The lender did not agree that all loan fees and interest should be waived, citing the need to balance Linda’s circumstances against fairness to all their customers.
Linda provides more information
Linda told us that the loan was affordable, but the repayments were making it hard for her to send money back home. Linda said that her work visa had since been extended to June 2028.
We asked the lender to consider offering Linda a lower interest rate to allow her to repay the loan by June 2028.
A fair outcome: reduced interest rate, earlier end date and higher fortnightly payments
The lender agreed to reduce Linda’s loan interest rate, change the loan end date from July 2029 to June 2028, and allow Linda to increase her fortnightly payments. We thought this was a fair offer.
Linda accepted the offer, and we closed the complaint.
