Our investigation

We reviewed the lending for the loans and found both to be reasonable. The loan for the mower and trailer was a business loan, and we were satisfied the bank met its obligations to Janis under the Code of Banking Practice to lend responsibly.

We reviewed the bank’s affordability assessment for the mower and trailer. The form Janis completed in March 2021 declared she had guaranteed business income of between $9,000 and $15,000 a month. Her bank statements supported this, with invoices each month coming to about $11,000. The bank used this figure in its affordability assessment. Janis disclosed her monthly expenses, and this left $6,172 a month, a generous buffer for other expenses, including those relating to her business. The bank did a credit check and found $1,347 owing to a telecommunications company. This default did not mean the bank could not lend to Janis. The bank was not aware of any outstanding debt to the Inland Revenue Department. The bank’s cross-checking of her income against her bank statements was sufficient, in our view, for it to be satisfied that Janis was likely to be able to make repayments.

Outcome

Janis accepted the bank's offer to write off one loan and repay the other at a lower interest rate.