Have you ever encountered that feeling that people owe you money, but you can’t recall at which point in your life this may have been, or how much the loan was for?

Are you the first eligible sibling in the family to have a paying job and your brothers and sisters who aren’t yet earning their own income, look to you for occasional handouts? So often we write up informal loan agreements (if anything is written up at all) between colleagues or a friend that’s going through a difficult time, and trust in the fact that these people who you have a relationship with and are now indebted to you, will pay you back as per your handshake agreement. But far too many fallouts between loved ones have been the outcome of such agreements.

New Zealanders can now breathe a sigh of relief because they’re about to start managing these mini loans amongst friends, family and colleagues via an online app that could end up filling their wallets once again of the money they once loaned out!

It’s new, it’s online and this tool that recently launched in New Zealand is seriously climbing the charts in popularity! In the first 3 weeks, there were live agreements processed on the app totalling over $31million. This is all at the courtesy of a company called Credi.com, established in April of this year in Australia.

Albeit an incredible app for many who have found this to be a useful tool in their lives, a few questions have been raised since in relation to the to the level of protection for users of the app.

As with all applications, it becomes a supply meeting demand scenario. Often times, it takes special individuals to cite such demands before potential users even realise it’s needed. Such an individual by the name of Tim Dean is the chief executive of Credi. Working in the field of online digital finance and having the experience to understand exactly why this would benefit the citizens of New Zealand, he became involved in this project and it’s proving to be every bit worth it!

We all know that in theory, we shouldn’t borrow from friends and family, but the truth of the matter is that they’re the first ones we look to in times of need, and they’re the first ones to offer assistance when times are tough. Evidence shows this to be very true for New Zealanders, where borrowing is happening between individuals in the millions, and if you’ll believe it – without any documentation whatsoever!

The online app is designed to address a need that essentially has come about due to the alternative solutions, which are deemed too pricey and mostly unavailable. As mentioned earlier with regards to the protection of the users, even though the loan is now in writing, it’s not a watertight means of protection if you don’t include any independent advice for the parties concerned. Credi doesn’t offer legal advice and therefore this should still be outsourced as a means of protection over and above the app’s documentation.

In Auckland, one of the mortgage brokers Malcolm Knight said it was found that there was a large number of lending from “mom and dad” when it came to their children buying their first- time homes, and along with that there was a level of trust due to the relationship. However, further fallouts have been recorded after agreements such as these have turned bitter after miscommunications concerning the terms of the loan.

According to Tim Dean, just under a third of Credi's loan agreements were property-related loans. The costs to make an agreement on the app aren’t unreasonable either and involve the same rigour as at a bank. The exciting thing that all the variables for a loan are included in the process when using Credi, i.e. the interest is added, you can set it up for annual or monthly repayments and even have reminders going out to both parties when it comes to keeping up to date on the agreement.

The thing to remember is that people are already lending family money, this is just a safer way to make it simple from the outset so that it’s simple in the end. No one wants to end up in dispute or falling out due to misconstrued information or agreements.

To sum it all up, you should use Credi because:

  • It will prevent disagreements and you can avoid any disputes
  • It means creating a custom legal contract seamlessly and in minutes!
  • No longer any need to worry about being taken advantage of
  • It keeps things organised and tracked
  • Notifications are automatically sent to the borrower when defaulting on payments, so this takes the emotion out of whether you need to send a reminder to yourself or not

All amendments to the agreement are recorded and further communicated – keeping all parties up to date.