How to Choose The Right Personal Loan in NZ

Comparing personal loan offers in NZ and choosing the right one.

How to Choose The Right Personal Loan in NZ?

There are many factors to consider when applying for a personal loan in New Zealand. Depending on the type of loan, it can be used for a wedding, vacation, home improvement project, car, or debt consolidation.

One of the No. 1 things to consider is how much you will actually pay by having a loan. On top of the money you are wanting to borrow, you must also agree to various fees, interest rates, and repayment terms. Doing your research on the best options beforehand can save you money long-term.

There is no one-size-fits-all approach to getting the best personal loan. Because you are unique, your loan needs will also be unique. When applying for new personal loans in NZ, your own credit history will determine many of the repayment terms.

Shop around for the best rates and pick the loan that will best serve you and your needs. Don’t settle for higher interest rates if you don’t have to. Keep reading to find out more about how to choose a personal loan.

Features of The Best Personal Loans

Terms will differ from lender to lender, as each sets their own terms. These are the main features to look for when shopping around for the best personal loan.

– Competitive interest rates and fees.

Interest rates fluctuate on a daily basis, so keep track of trends and take note of which companies offer lower rates. In addition, consider the fees associated with the loan so that you can avoid paying more than is necessary.

– Short time to fund.

Some lenders can take longer than others to fund a loan. Depending on your timetable, you will need to plan accordingly.

– Flexible repayment terms.

Some lenders give breaks and won’t require a payment for up to 60-90 days after funding. Additionally, lenders usually offer weekly or monthly payment plans to help you stay on track.

– High maximum loan amount options.

The loan amount you need will determine which lender you should use. Find out each lender’s limits to help you figure out which one can and can’t help you.

5 Types of Personal Loans (and How to Choose One)

This guide will explain the different types of personal loans, what to look for when choosing the best option, and what qualifications you will need. Whether you are looking for a quick- or long-term option, there is a best personal loan for your situation.

1. Car

A car loan is specific to those wishing to purchase a car. You will receive your money from the lender in a lump sum to pay for the car, and then you pay back that money over time with interest.

How much it costs: Car loan interest rates are usually available from about 8% and upwards depending on your credit rating and ability to service the loan. Car loan providers will also include an establishment fee but this varies hugely from provider to provider.

Who can get one: A good credit score is needed to finance a car. Lenders like to see a history of making on-time payments and a low debt-to-income ratio. Additionally, someone who has years worth of credit history is favorable over someone who is just starting to build his or her credit. A cosigner can be acceptable, as well, for those who struggle with any of the qualifications.

Where to apply for one:


Simplify specialises in personal loans in NZ for cars. This online lending company provides New Zealanders with a better way to finance, buy, or subscribe to their next car. The company’s stated belief is that the financing process should be fun, fast, and easy.

Simplify offers quotes within 6.2 seconds. Enter the amount of your loan request, answer some questions about the car you want to purchase, and provide some personal information; then the program will analyse your options.

See all our Car Loan options.

2. Secured

A secured loan is one in which the borrower must pledge some kind of collateral in exchange to the lender. If the borrower defaults on the loan, the lender can take the collateral as payment instead. Secured loans tend to be used for large purchases.

How much it costs: In general, secured loans have lower rates that fall below 10%. Depending on the lender with which you finance, there could be processing fees. Keep this in mind when shopping around for the best rates.

Who can get one: Borrowers with a tight budget typically use secured loans because they have lower interest rates. A credit check is required to apply for one, and a debt-to-income ratio assessment is performed to make sure you have the means to pay back your secured loan.

Where to apply for one:


An secured personal loan can be found on Harmoney, Australasia’s largest personal loan marketplace. It offers loans from $2k to $70k, three-to-five year term limits, and a $0 early repayment fee. To apply with Harmoney, you must be at least 18 years old, a permanent resident or citizen of NZ, have a stable income, and provide valid identification.

3. Debt Consolidation

Debt consolidation is like refinancing your debt. Essentially, you take out one loan to pay off many loans. This helps you pay off debt faster and uses one interest rate versus multiple, if you have several open accounts.

How much it costs: The range for interest rates is between 6.99% and 29.95%. Late fees can be applied, but it is up to the lender to determine when those will be assessed.

Who can get one: Your credit report and payment history are determining factors when applying for debt consolidation loans. You will also need proof of income to show lenders that you can pay back the loan.

Where to apply for one:

The Cooperative Bank

The Cooperative Bank offers fair interest rates on consolidation loans that are structured around your needs. It offers loans from $3K up to $50K, with repayment plan terms of six months up to five years.

There is a $200 establishment fee per application, which is added to the loan amount. Applicants must be 18 years old or older and be living in NZ as citizens, permanent residents, or those who hold a work visa.

4. Unsecured

An unsecured loan is one that is only supported by your credit worthiness, with no security involved. This type of loan is riskier for the lender.

How much it costs: Interest rates tend to be higher for unsecured loans, as there is no collateral the lender can hold as security. The average rates can be anywhere from 5% to 30%. Some companies charge an origination fee that is tacked on to your loan. Instead of a flat fee, this is paid in a percentage, roughly 1 to 8% of your loan amount.

Who can get one: Most lenders require a minimum credit score to qualify. But lenders can, at their own discretion approve applicants who are below that score.

Where to apply for one:


Nectar is a digital lending company specializing in personal loans in NZ. An application can be approved in as little as seven minutes. It offers loans from $2k to $30k, money in your account within one day, and competitive rates.

To be considered for a personal loan through Nectar, applicants must be at least 18 years old, be a resident or permanent citizen of NZ, make at least $400 per week after tax, and have no previous bankruptcies or significant defaults.

5. Bad Credit

A bad credit loan is specifically targeted toward borrowers with a low credit score. It can be used for a variety of things you might need, and it ranges from small $200 loans to upward of $20k.

How much it costs: If you have bad credit, lenders take a risk giving you money to borrow. Therefore, the interest rates are higher, and there are more fees to consider – such as late fees, origination fees, and partial payment fees.

Who can get one: Some lenders offer bad credit loans with no minimum credit score. But they do consider your job history, education, and any free cash flow you have. Applicants must be at least 18 years old.

Where to apply for one:

Instant Finance

Instant Finance is one of the best options for bad credit personal loans. Choose the amount you need and how you want to repay your loan. There are weekly, fortnightly, and monthly options. You can also choose loan terms up to three years.

5 Tips to Help You Pick The Right Personal Loan

Figuring out how to choose a personal loan can take some effort. Now that you know all of your options, how do you choose the right one for your situation? You know it’s a good fit for you if:

– You understand the five loan types. Categorizing your loan needs under one of the five types can lessen confusion when choosing a lender. Knowing exactly what you need will guide you to the best personal loans in NZ.

– You meet the minimum requirements. This is an easy way to eliminate the lenders that you can’t choose. If you know where your credit score stands, for example, this will add or eliminate lenders from your list of options.

– You have compared interest rates. The lowest interest rate and shortest repayment plan can save you the most money. Not all lenders have the same interest rates. Shop around to make sure you’re getting the best one.

– You can afford the payments. Don’t choose a loan that offers a plan you can’t afford. Be smart with your choices, and don’t get yourself into an agreement that will cause headaches down the road.

– You can’t make ends meet without the loan. Always consider the alternatives. Is the loan necessary, or can you earn the money by working some extra overtime? Loans can be a quick fix, but they can also cost you more long-term.

Choosing a Personal Loan Doesn’t Need to Cause Stress

Financial decisions can be tough to make. There are many questions to ask, and it can seem as though lenders compete for your business without having your best interest in mind. It’s OK to compare personal loans and request quotes from multiple companies.

At the end of the day, what’s important is what will work best for you. Getting different quotes will help you find the best rates, which in turn will save you money.

Now that you know the types of personal loans that are available in NZ, you can start making smarter choices about the financial route you want to take. From unsecured, to bad credit, to consolidation loans, there is an option that’s right for you and your future.

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