Bills are due. Accidents happen. Emergencies pop up when we least expect them. That’s just the way life goes.
The thing is, unforeseen events and other pressures can make it challenging to meet your financial responsibilities, especially if you are receiving benefits.
What’s known as a beneficiary loan is a fantastic solution if you’ve found yourself short of cash and currently receive weekly or monthly benefits. These loans are similar to payday loans but are specifically designed to meet the unique needs of beneficiaries.
Let’s take a look at beneficiary loans in more detail and discuss the loan document you may need to supply as a part of your loan agreement.
What is a beneficiary loan?
A beneficiary loan is designed for the more than 277,000 New Zealanders that receive benefits. The borrower receives funds with the understanding that repayment will be made the next time they receive their benefit.
For example, say your car breaks down and requires urgent repairs. You won’t have the cash to pay for the repairs until you receive your next benefit in two weeks’ time. The problem is, you need your car to get to and from work. A beneficiary loan will give you the funds you need to get your car fixed – even if you have a poor credit score. When you receive your next benefit, you can begin paying off your loan.
Beneficiary loan agreement: how it works
The process is pretty straightforward.
A beneficiary loan agreement works by awarding a sum of money to an applicant based on their eligibility. The funds are then used for an emergency payment, such as repairs, rent, phone bills, or medical treatment.
Under the loan agreement, the borrower will begin repaying the loan when they next receive their benefit.
Required loan document
If a beneficiary loan sounds like the right solution for you, it’s time to get the ball rolling.
Like any loan, you will need to provide documentation to support your loan application. The good news is, short-term loan applications with reliable lenders are not the stressful, time-consuming, drawn-out process you might think them to be. In fact, most applicants gain approval within 24 hours.
To apply for a beneficiary loan, you’ll need to submit an up-to-date bank statement, along with your full name and contact details. It really is that easy!
After you have been assessed by the lender and approved, you will see your funds in your bank account within hours.
Potential drawbacks of beneficiary loans
Like any form of credit, it’s vital that you spend your beneficiary loan wisely. Borrowed funds must be used responsibly and paid back according to the loan agreement.
Keep in mind that beneficiary loans are short-term loans, meaning they often come with slightly higher interest rates. Stick to your repayment schedule, and you’ll avoid overpaying for your loan.