Frequently asked questions. Just in case.
We thought we’d pre-empt a few questions that you might have. So take a look and if you can’t find the answer you’re looking for, fill in the form below and we’ll get back to you as soon as.
Will Squirrel Money lend to me?
We’re not the right lender for everyone. Our focus is on high quality creditworthy borrowers earning an income of at least $25,000 per year (you also can’t be earning the majority of your income from Government benefits). If you’re not good with money and have poor account conduct or a poor credit file, then we are unlikely to lend to you.
Can I repay my loan early?
Yes. You can repay your loan as quickly as you like and at no additional cost.
How much money can I borrow?
We provide unsecured personal loans from $3,000 to a maximum of $29,999. We also offer secured personal loans between $30,000 and $70,000 when fully covered by property or motor vehicle.
How much does it cost to borrow?
Our up front establishment fee is $250 flat rate for loans under $30,000 and $500 for loans $30,000 and above.
How long can I borrow for?
The minimum loan term is 2 years and the longest is 5 years but once you have a loan you can pay it back as quickly as you like at no additional cost.
What happens if I miss a payment?
If you miss a payment we’ll follow up with you to find out what’s up and give you 5 day’s grace to get the account back in order. Should your account remain out of limit after this period you will be charged a $25 default fee per month and begin accruing penalty interest on your loan account at 5.0% p.a. above your normal interest rate.
Who can invest with Squirrel Money?
We only allow NZ tax residents over 18 years of age to invest through our platform. Keeping it to NZ tax residents avoids complications with non-resident withholding tax.
How much interest can I expect to receive?
Our current market interest rates are displayed on our Investor page. Investors choose a minimum interest rate they are willing to accept on their investment between a range of 7% and 9% p.a. depending on the investment term. The interest rate you choose in the platform is the interest rate you will receive, before RWT (Resident’s Withholding Tax) is deducted. When funding a loan, we use the lowest available investor rates in the platform first to ensure we can offer the most competitive interest rates and continue to attract high quality borrowers.
Is there a fee for investing?
When you place an investment order, the rate you bid into the platform is the minimum rate of return that you will receive on that investment. The only deductions from your investment return from that point will be for resident withholding tax on the interest you are credited with once your investment order is matched to an approved borrower. For a breakdown of our fees, check out our Fees page.
Can I get my funds out early?
Our Secondary Market allows an Investor to sell an investment at any time provided there is another Investor willing to match the original terms of their investment (amount, term and interest rate). The option to sell your investment can be found at the bottom of the ‘Investments’ tab on your investor dashboard. We deduct a fee of 1% (up to a maximum of $50) from your investment balance when it is sold through the Secondary Market. Read more about the Secondary Market in our Secondary Market Policy.
Why am I receiving more interest than I expected?
If there are multiple Investors funding one loan, the interest rate received will be at the highest requested rate of all the Investors funding that loan. Therefore, it’s possible to receive a higher interest rate than you originally requested. For example, three investors contribute $20,000 each to fund a $60,000 loan. Two Investors requested an interest rate of at least 8% while one had requested a rate of at least 9%. Under this scenario, all three Investors will receive an interest rate of 9% on their investment.
Is my return taxed?
We will deduct RWT from your interest payments. This is paid to IRD and we will issue you with an IR15 certificate that you can use for your tax return. You can expect this by 20th May following the tax year-end.
What happens if a Borrower misses a payment?
For the Investor, the Reserve Fund we have put in place is there to provide Investors some protection from missed Borrower repayments. When the Borrower catches up with repayments, any extra payment will be paid to the Reserve Fund until the arrears are cleared. Borrowers are actively managed when they go into arrears on a loan. We’ll contact them initially to find out what’s happening and put a repayment plan in place if required. If we’re unsuccessful, then after one month it is passed to an external debt collection agency. For more information about how we assess the risk of our Borrowers defaulting, read our Investor Booklet.
What is the market rate?
The market interest rate is the average rate Investors have received on recently funded loans.
Is investing through Squirrel Money guaranteed?
Investing through Squirrel Money is not guaranteed. We have however attempted to mitigate the risk to Investors as much as we can by putting in a Reserve Fund, cyber and fraud insurance, as well as employing strict lending criteria. In the unlikely event you were to suffer losses these should be minimised by these risk mitigants. For more details about the protection offered by the Reserve Fund, please refer to our Investor Booklet.
How likely is it that the Reserve Fund runs out?
The expected loss rate on our loan book typically ranges between 1.1% and 1.2%. This expected loss assumption is consistent with historic NZ loss rates on higher quality loan books and was validated by external sources during the development of our credit model. The reserve levy that is collected from each Borrower repayment is intended to exceed the expected credit loss on the loan book and ensure the Reserve Fund grows over time. We regularly review our reserve levy rates in the context of loan book performance and the Reserve Fund balance to ensure we are collecting sufficient reserves to offset future credit losses.
If the event that the Reserve Fund was to run down over time, we maintain the ability to divert part or all of Investor interest payments (not capital) into the Reserve Fund to cover credit losses. This effectively means losses are socialised across all Investors in the platform and helps protect the capital of all Investors. Read more about this on page 8 of our Investor Booklet.
How safe is my money?
Investor funds are kept in an Independent Trust and do not form part of Squirrel’s business or assets. We rigorously check our Borrowers to ensure they’re creditworthy. We have Loan Shield to cover expected credit losses and insurance to protect against acts of cyber crime and fraud. In a nutshell, we work hard to look after your money.
What is the minimum investment?
The minimum bid amount for an investment is $500. The maximum you can invest through our platform is $2million.
When I deposit funds into my account on Friday, why can I not invest them until after the weekend?
Squirrel Money receives bank transactions from ASB daily for the previous day so the system is always one day behind. Also we don’t receive a bank feed on Sunday.
Why can't money be instantly invested in loans?
There are a couple of reasons why your investment order may not be instantly matched and invested in a loan.
* The platform attempts to match investment orders with loans at 30 minute intervals.
* A loan needs to be 100% funded before investment orders are allocated to a loan. Assuming a $10,000 loan requires funding and you have placed a $5,000 investment order, we would need the remaining $5,000 before your investment order can be matched (or alternatively after 48 hours when we typically step in and fund the remainder).
* There could already be sufficient investment orders in the platform at a lower interest rate. These investment orders would be used first to fund an awaiting loan and provide a borrower with most competitive interest rate.
What happens if Squirrel Money fails?
Investor funds and loans are held inside an Independent Trust. We have set aside sufficient funding by way of a bank bond issued to the Trust for the Trust to continue to administer the loans even if Squirrel was wound up. As part of our license we maintain a disaster recovery and termination plan. In the event that the Platform ceases operation, any balances remaining in the Reserve Fund following repayment of all outstanding Loans and otherwise at the end of any managed wind-up process, will be donated to the Starship Foundation or such other charity having similar charitable purposes selected by the Trustee or any other person primarily responsible for the winding-up of the Platform.