Low Rate Personal Loans NZ: How to Choose the Right One

We compare 5 low rate personal loans and give you tips on finding the best loan for you.

Taking out a personal loan is a fairly significant financial decision. There are several important things you need to carefully consider to make sure you get the right loan for your specific needs. What’s best for one borrower’s needs won’t necessarily be the best option for someone with different needs. We take you through what you need to consider before taking out a personal loan. We also compare the key features of five low rate personal loan products currently available from different lenders in the market — helping you uncover the best personal loan in New Zealand.

Choose between secured and unsecured

There are many reasons why people look to borrow money. Consolidating credit card debt, purchasing a car, going on a holiday or paying for a wedding are just a few of the common purposes. The purpose of the loan will help to decide whether secured or unsecured is more appropriate.

Secured personal loan

If you take out a secured personal loan, you need to provide an asset as security to the lender. A common asset used to secure a loan is a car — car loans are generally set up as a secured loan. Secured loans are usually cheaper because the lender can take legal ownership of the asset if you fail to repay the loan. The lender’s interest in the asset is registered on the New Zealand government’s Personal Property Security Register.

Unsecured personal loan

On the other hand, an unsecured loan doesn’t require you to provide any asset as security. This can be very beneficial if you don't own any appropriate vehicles or property to use as security. Because there is no security for the lender, unsecured personal loans are seen to be a higher risk for the lender, so they charge a slightly higher interest rate.

Find a low interest rate

When you take out a loan, you will be charged interest by your lender. Over the term of your loan, you will pay back the amount you borrowed plus any interest charges. Finding the lowest interest rate is a good start for finding the cheapest loan. However, be aware of loan fees and charges as well. Make sure you look for the comparison rate on the loan. The comparison rate includes the cost of interest plus most lenders fees and charges. It gives you a more accurate picture of the total cost of the loan. Choosing the loan with the lowest comparison rate generally means you've found the cheapest loan, but cheapest doesn't always mean it's the best. Be sure to consider loan features in addition to cost. Interest rates on personal loans can be fixed or floating. A fixed rate loan has the same interest rate for a set period (or potentially the full loan term). A floating interest rate can move up or down based on market interest rate movements.

Take note of the fees

Lenders can charge a range of fees on loans in addition to interest. They can include:

  • a loan application or establishment fee,
  • ongoing administration/service fees, and
  • other fees charged by the lender (for example, early repayment fees).

Make sure you read the terms and conditions before you take out a personal loan so you understand all of the potential fees you may be charged.

Choose a loan term that suits your needs

Standard personal loan terms range from one to seven years. The loan term will affect your loan repayments and how much you can afford to borrow. Longer loan terms have lower repayments than shorter terms for the same loan amount, but you will pay more interest overall. However, the lower repayments on a longer loan term can allow you to afford to borrow more.

 

Our top 5 low rate personal loans

Looking for a personal loan with a low interest rate? Below is a comparison of the key features of five low rate personal loan products currently available from different lenders.

The Co-operative Bank

Type of personal loan: Unsecured personal loan.

Interest rates: Floating, starting from 6.99% based on your credit history. If you have a good credit score, you will be eligible for a lower interest rate.

Comparison rate: From 7.69%.

Minimum loan: $3,000.

Maximum loan: $50,000.

Loan terms: Range from 6 months to 5 years.

Loan establishment fees: $155.

Monthly fees: Nil

Early repayment fee: Nil.

Repayment options: Weekly, fortnightly or monthly.

Example repayments on a $15,000 loan over 3 years: The advertised rate is 6.99%, so if you borrow $15,000 over 3 years you will pay a $155 Establishment Fee and no Monthly Fees. You will repay $467.87 each month and $16,843.43 in total.

Find a low rate loan with Co-operative Bank.

Gem

Types of personal loan: Secured and unsecured.

Interest rates: Fixed interest rate. From 6.99% for secured personal loans. They start from 8.99% for unsecured loans. Rates for both secured and unsecured personal loans are based on your credit history.

Comparison rate: from 8.07%.

Minimum loan: $2,000.

Maximum loan: $50,000.

Loan terms: range from 6 months to 7 years.

Loan establishment fees: $240.

Monthly fees: Nil.

Early repayment fee: Nil.

Repayment options: weekly, fortnightly, or monthly.

Example repayments on a $15,000 loan over 3 years: With the advertised rate of 6.99%, if you borrow $15,000 over 3 years you will pay a $240 Establishment Fee and no Monthly Fees. You will repay $470.50 each month and $16,937.90 in total.

Learn more about Gem personal loans.

Harmoney

Type of personal loan: unsecured.

Interest rates: fixed. They start from 6.99% and are based on your credit history.

Comparison rate: from 7.66%.

Minimum loan: $2,000.

Maximum loan: $70,000.

Loan terms: 3 or 5 years.

Loan establishment fees: $150.

Monthly fees: Nil

Early repayment fee: Nil.

Repayment options: weekly, fortnightly, or monthly.

Example repayments on a $15,000 loan over 3 years: The advertised rate is 6.99%, so if you borrow $15,000 over 3 years you will pay a $150 Establishment Fee and no Monthly Fees. You will repay $467.72 each month and $16,837.88 in total.

Explore Harmoney's personal loans.

Lending Crowd

Types of personal loan: secured and unsecured.

Interest rates: fixed. From 6.45% for secured personal loans. From 6.98 for unsecured personal loans. Rates for both secured and unsecured loans are based on your credit rating and loan term.

Comparison rate: from 9.33%.

Minimum loan: $2,000 for unsecured loans, $5,050 for secured loans.

Maximum loan: $50,000 for unsecured loans, $200,000 for secured loans.

Loan terms: 2, 3 or 5 years for unsecured loans, and 3 or 5 years for secured loans.

Loan establishment fee: $350 to $650, depending on the size of the loan.

Monthly fees: Nil.

Early repayment fee: Nil.

Repayment options: monthly repayments.

Example repayments on a $15,000 loan over 3 years: With the advertised rate of 6.98%, if you borrow $15,000 over 3 years you will pay a $450 Establishment Fee and no Monthly Fees. You will repay $476.91 each month and $17,168.76 in total.

Find out more about personal loans from Lending Crowd.

 

Simplify

Types of personal loan: secured.

Interest rates: fixed. From 6.25% and are based on your credit history.

Comparison rate: from 10.62%.

Minimum loan: $5,000.

Maximum loan: $150,000.

Loan terms: 1 to 5 years.

Loan establishment fee: $0 to $995, depending on the size of the loan.

Monthly fees: Nil.

Early repayment fees: Nil.

Repayment options: weekly, fortnightly, monthly.

Example repayments on a $15,000 loan over 3 years: With the advertised rate of 6.25%, if you borrow $15,000 over 3 years you will pay a $995 Establishment Fee and no Monthly Fees. You will repay $488.41 each month and $17,582.86 in total.

Find the right Simplify loan for you.

 

As you can see, there are several important considerations when taking out a loan. Whether you're looking for a debt consolidation loan, a car loan, or a personal loan intended for another purpose, there are many personal loans to suit your needs.