KEY POINTS:
When Aaron Ngawaka needed finance to start a small online business to supplement his wages, his bank refused him a loan - but offered him a credit card instead.
Ngawaka, 46, and his wife El-lixia earn $75,000 a year between them to support themselves and their four girls aged 19 to 4.
They rent their home in Manurewa and have only one major commercial debt, to Senate Finance for an $11,000 van. They are paying $100 a week for it for 3 1/2 years, a total price of $18,000.
Husband and wife are also paying off student loans, adding an extra 10 per cent to their tax rates. Aaron Ngawaka had to give up a 25-year career as a builder because of back problems a few years ago but retrained in computing skills and has just completed a Bachelor of Adult Education for his current job teaching computing at Te Wananga o Aotearoa.
El-lixia Ngawaka, a numeracy and literacy tutor for the Solomon Group, is doing the same degree.
"I'm a bit of an entrepreneur and I thought I'd try something out," says Aaron. "It was an online business venture promoting products. I did it on the side while I was working."
He needed money to advertise the products and asked his bank for a loan.
"The bank didn't want to know about me. I didn't meet the criteria," he says. "The bank wouldn't lend to me because of my budget. They turned round and said: 'Use your credit card.'
"That's the only reason why I got the cards." He got two cards and used them to spend $9000 on advertising. Both charged 18 per cent interest, making monthly payments $100 on one and $30-$50 on the other.
"I was just paying off the interest. I couldn't afford to pay the principal."
Unlike many, Aaron has found an answer to his problem. He has refinanced with a $10,000 five-year personal loan at 12 per cent interest from the United Credit Union, which offers a $10,000 loan to anyone who belongs to a union affiliated to the NZ Council of Trade Unions. "That cleared my credit cards and the van and a couple of other debts and only left me with $200 in change," he says.
"I'm happy because it's enabled my family to meet the day-to-day living costs which before it wasn't."
