How to Choose The Right Unsecured Personal Loan in NZ


Life rarely goes as planned, and many people find themselves seeking out loan options at one time or another. Whether it’s a new life venture, the purchase of a new vehicle, or a need to clean up past mistakes, there are many reasons why people take out unsecured personal loans.

These can be a quick fix in an emergency. They can also provide instant gratification in quickly covering the cost of a new toy. But before applying for a loan, consider all of the available options.

To find the best unsecured loans, first research the various financial institutions, because not all of them offer this type of loan. Here is a guide to understanding unsecured loans that can be used to find the perfect fit for all financial needs.

What is an Unsecured Loan?

Unsecured personal loans differ from secured loans in that they do not have to be backed by any form of collateral. They are approved based on the borrower’s credit history and income stability, and they can be used for a variety of personal needs.

The Benefits of Taking Out an Unsecured Loan

Unsecured personal loans can be helpful in many ways. Here are a few reasons borrowers look for unsecured loans:

  • No collateral. Borrowers are not required to provide collateral, such as a vehicle or private residence, to receive the loan.
  • Flexible repayment options. According to the terms of this type of loan, the repayment length can be anywhere from a few months to several years.
  • Multiple uses. This kind of loan can be used for a variety of things, making it more appealing.
  • No early repayment fees. Most lenders do not charge borrowers for making early payments on their unsecured loans.

The Risks of Taking Out an Unsecured Loan

While taking out an unsecured loan can sound appealing, it’s important to consider some of the associated risks to make sure all bases are covered:

  • High interest rates. Because there is no collateral needed for an unsecured loan, higher interest rates may be added to compensate for the potential of default.
  • Possible negative impact on credit scores. Borrowers who default on their payment schedules can see a drop in their credit scores.
  • Higher qualifications. Unsecured loans are based on the borrower’s creditworthiness, so a good credit history is typically needed for approval.

5 Best Unsecured Loans in New Zealand

Researching the benefits and risks associated with this kind of loan is only part of the necessary homework. Understanding who offers the best unsecured loans will give you a better idea of where to start an application.

1. Harmoney

Harmoney is a popular New Zealand company that offers unsecured personal loans to fit nearly any lifestyle. Its loans are funded quickly – usually within 24 hours. There is no additional account maintenance fee, and borrowers’ approved interest rates will not change throughout the life of the loan.

Interest rates and fees: Interest rates range from 6.99% to 24.69%. There is a $200 establishment fee added to loans that are less than $5,000. Loans that are greater than $5,000 come with a $450 establishment fee.

Requirements: Applicants must be at least 18 years old and be permanent residents or citizens of New Zealand. They must also provide proof of income.

How to apply: Visit Harmoney’s website and select the ‘Apply Now’ button to begin. A valid email address, Google account, or Facebook account is required to proceed with the application.

2. Lending Crowd

Lending Crowd is a business that utilizes peer-to-peer lending options. This platform connects borrowers and lenders directly without having to use a middle man, such as a financial institution. It also allows borrowers to apply for unsecured loans up to $50,000. Lending Crowd processes loan applications and executes loans 100% online, saving borrowers the extra trips to a local bank.

Interest rates and fees: Unsecured rates are as low as 5.66% and can be as high as 19.3%. A platform fee that is applied to each loan ranges from $200 for loans up to $5,000, to $450 for unsecured loans up to $50,000.

Requirements: Lending Crowd assesses applicants on a case-by-case basis. Borrowers must be at least 18 years old, hold a valid NZ driver’s license or passport, and provide bank statements to show income.

How to apply: Begin the application process first by requesting an anonymous quote. After receiving an initial quote in minutes, complete the full application if so desired.

3. The Co-operative Bank

The Co-operative Bank offers unsecured loans with floating interest rates, meaning those numbers can change at any time during the life of the loan. While it may sound intimidating, this feature can actually save a borrower money if the rate drops. The Co-operative Bank offers loans up to $50,000 that can be used for a variety of needs. This institution also offers insurance policies to cover loan payments in the event of death, sickness, or injury.

Interest rates and fees: Rates can be as low as 6.99% and as high as 19.99%. A $200 application fee is assessed, as well.

Requirements: To apply, borrowers must be at least 18 years old and have proof of their NZ citizenship or permanent residency. Proof of income is also required.

How to apply: An application can be completed online in minutes. Simply fill in the required sections and then submit when ready. Three months’ worth of bank statements will also be needed, but those can be submitted at a later time.

4. Nectar

Nectar is a NZ business offering unsecured loans online for many uses such as holidays, weddings, and emergencies. It offers fixed rates for the life of the loan, and it bases those rates on borrowers’ individual credit assessments.

Interest rates and fees: The range for rates is between 8.95% and 29.95%. A $240 establishment fee will be applied to the loan.

Requirements: Applicants must be 18 years old or older, hold a valid NZ license or passport, and earn a minimum of $350 per week.

How to apply: Complete an application online in as little as seven minutes.

5. ASB

ASB offers unsecured personal loans to Kiwis for their home improvements, car purchases, vacations, medical expenses, and more. Loans are funded within 24 hours of approval. The company’s intuitive repayment calculator can give borrowers more confidence in moving forward with a loan.

Interest rates and fees: This company’s unsecured loan rates range from 12.95% to 19.95%. Additional fees include a $99 loan processing payment.

Requirements: NZ residents or citizens who are at least 18 years old may apply. Applicants must make a minimum of $20,000 per year to be eligible for approval.

How to apply: Select ‘Apply for a Loan’ on the ASB website and either proceed with the application as an existing member or create a new account.

What You Should Know Before Choosing an Unsecured Loan

Unsecured loans can have a major impact on an individual's life. Here are some things to be aware of before taking out this type of loan.

What is the highest available unsecured loan amount?

The loan amount will vary by lender and is based on a borrower’s creditworthiness. If a lender offers loans up to $50,000, that doesn’t necessarily mean that just anyone can be approved for that amount. The lender will review each application and determine whether to approve or reject individual requests.

Are unsecured personal loans guaranteed approval?

No loan comes with the guarantee of approval. Approval is based on factors such as income, credit history, and the purpose of the loan.

Can I get an unsecured personal loan with bad credit?

Unsecured loans are usually extended to those with a good credit history. But since lenders can do business with whomever they choose, it really is up to the individual company’s discretion if it would approve a loan for someone with bad credit.

What is the average interest rate on an unsecured loan?

Loan rates vary from lender to lender and can be anywhere from 5.66% to 29.95%. The final interest rate for an individual is determined by a credit check.

Do unsecured loans hurt your credit?

Borrowers who fail to repay their loans may experience a dip in their credit scores. The consequences for defaulting on a loan do not change based on whether it is secured versus unsecured.

How to Get a Personal Loan Without Collateral

  • The idea of applying for a loan without needing to offer up collateral might seem both risky and too good to be true. But this actually happens fairly often.

  • The best way to get an unsecured personal loan without collateral is to research the options ahead of time. While borrowers with a good credit history are more likely to get approved for unsecured loans, people with bad credit are not necessarily disqualified from receiving this type of loan.

  • To determine where to apply, compare unsecured loans based on the companies found in this guide. Low rates will typically save borrowers more money in the long run. Always consider each lender’s additional fees, to get the maximum savings possible.

  • Shop around and compare all of the available businesses. Potential borrowers should also rule out any companies that they don’t qualify for ahead of time, by carefully researching their various requirements. Putting time into analyzing the best unsecured loans is always a worthwhile investment.