Getting a loan in New Zealand while you are on Jobseeker Support

What Jobseeker Support is, and why it matters to a lender

Jobseeker Support is the main New Zealand benefit for people who are unemployed and looking for work, working part-time and wanting more hours, or unable to work full-time because of a health condition, injury or disability. It is paid weekly by Work and Income, part of the Ministry of Social Development.

A lender sees a payment that can fall as other income rises, can be reduced if obligations are not met, and has to be renewed. Work and Income asks you to reapply every 26 weeks if you still need support, so a bank cannot count on it the way it counts on a permanent wage.

Who can receive the benefit

You generally need to be 18 or older, or 20 or older if you have dependent children, and be a New Zealand citizen or hold a residence class visa. Full-time students are normally directed to StudyLink instead. Your combined income, including a partner's, must stay under weekly limits that depend on your household.

The amount paid depends on your situation. At the time of checking, the Work and Income page showed a maximum of about $372.55 a week after tax for a single person aged 25 or over, and higher figures for couples and sole parents. Rates are reviewed regularly, so confirm the current table on the official page before you plan a budget around it.

• Payments fall as other income rises and stop after six weeks at nil.
• A Community Services Card, Winter Energy Payment and family tax credit may be available on top, depending on your circumstances.

Borrowing from a bank on a benefit income

Mainstream lenders in New Zealand must assess whether a loan is affordable under the responsible lending rules. With a benefit as the only income, the margin left after rent, food and power is often too thin for a standard personal loan, and applications are frequently declined.

Some people strengthen an application with a partner's wages, a guarantor or an asset such as a car. None of these is a promise of approval. If a lender does say yes, read the interest rate, the establishment fee and any insurance add-ons, because these decide what you really repay.

An advance from Work and Income

For an essential or emergency cost, such as a car repair, a fridge or dental treatment, people on a main benefit can ask Work and Income for an advance payment of benefit. It is repaid, usually in small amounts taken from your payment, so ask about the terms before agreeing.

Eligibility depends on your income and assets, and the money is loaded onto a payment card with a short window to spend it. Because the advance comes out of future payments, it makes next month tighter. It is still usually far cheaper than short-term commercial credit.

Interest-free community loans

Good Shepherd New Zealand runs Good Loans, which carry no interest and no fees, are paid straight to the seller or creditor, and cover items such as a car, repairs or essential household goods. Its published rules rule out people whose only income is a single Jobseeker Support benefit and those for whom Work and Income can fund the same purchase.

That does not close the door for everyone. A household with a partner's income, or someone who has just started work, may meet the criteria. Other community lenders, including Ngā Tāngata Microfinance, set their own rules, so check each one directly rather than assuming you are out.

Illustration: a broken-down car

Take a single person on Jobseeker Support whose car fails its warrant just as a job interview is booked. A typical sequence is to ask Work and Income whether the repair qualifies for help, then to ask about an advance, and only then look at a community loan or a mentor-supported plan.

A high-cost lender who offers money the same day is the last resort, because fees and interest on a small sum can grow quickly when your income is fixed. This example is illustrative and does not describe a real person or a guaranteed result.

Warning signs and free help

Be wary of anyone who asks for a fee before releasing a loan, who contacts you unprompted by text or social media, or who pressures you to sign on the day. Registered lenders can be checked on the Financial Service Providers Register, and a genuine lender will not hide the total cost.

MoneyTalks, run by FinCap, offers free and confidential help on 0800 345 123, by text on 4029 or by online chat. A financial mentor can look at your budget, check you receive everything you are entitled to, and talk through a loan before you commit.