If you’re looking for a personal loan in New Zealand, it can feel overwhelming with all the options available. How do you know what type of lender to choose? If you should get a secured or unsecured loan? Or whether you’re getting a good deal?
Whether you’re planning a big purchase or simply need to cover unexpected expenses, understanding the ins and outs of loans in NZ is crucial.
This guide will walk you through everything you need to know about personal loans. You’ll learn the differences between secured and unsecured loans, discover the types of lenders available, and explore how East Bay Finance can help simplify your loan experience.
Let’s get started!
Understanding Personal Loans NZ
Loans come in various forms, each with its own features and benefits. In New Zealand, the two main types of personal loans are secured and unsecured loans, both offering advantages depending on your financial situation.
Secured Loans
Secured loans require collateral, such as property or a vehicle, to secure the loan. This means you risk losing the asset if you’re unable to repay the loan. However, secured loans generally offer lower interest rates and higher borrowing limits.
Secured loans are ideal for individuals with valuable assets who need a significant sum of money. They can be used for large expenses like home renovations. A secured loan may also be a good option if you have bad credit, but more on that down the page.
Unsecured Loans
Unsecured loans, on the other hand, don’t require collateral. Instead, you’re simply given cash to spend however you like. Lenders base their decision on your ability to repay the loan. While unsecured loans usually come with higher interest rates, they provide added flexibility and less risk to your assets.
These loans are perfect for smaller expenses, such as consolidating debt, buying a car or funding a vacation. The application process is often faster and less complex than that of secured loans, making them a popular choice for many Kiwis.
High-Cost and Low-Cost Lenders
Before we get into the different types of lenders, it’s important to understand the difference between high-cost and low-cost lenders.
In New Zealand, high-cost lenders are defined as providing loans with an annual interest rate of more than 50%. Lenders that charge rates like this are often known as “payday lenders”, and they should be avoided because their loan costs are simply massive.
On the other hand, low-cost loans have interest rates of less than 50%. At East Bay Finance, you won’t pay anything near that – our rates come in well below that figure, but the exact amount will depend on your individual circumstances.
Be aware that some lenders charge interest rates of 49.5%, so they can avoid being labelled as “high-cost” lenders, but their interest rates are still high. When you’re choosing a lender, find out their rates before you sign on the dotted line to make sure you’re getting a fair deal.
Types of Lenders
In New Zealand, several types of lenders offer personal loans. Understanding their differences will help you decide which is best suited to your needs.
Banks
Banks are traditional lenders known for their reliability and established reputations. They offer a wide range of loan products, including both secured and unsecured loans. While banks are typically highly trusted, they do tend to have stricter lending criteria and longer application processes.
They can also have less flexibility in the rates they offer, meaning people with excellent credit scores could end up paying a higher rate than they need to.
Finance Companies
Finance companies are non-bank lenders that specialise in personal loans. They often have more flexible lending criteria than banks, making it easier for individuals with less-than-perfect credit to obtain a loan. However, finance companies may charge higher interest rates to offset
Credit Unions
Credit unions are member-owned financial institutions that prioritise their members’ interests over profits. They tend to offer lower interest rates and fees compared to banks and finance companies. However, you must become a member to access their loan products.
Online Loan Brokers
Many people get loans online these days, and it’s easy to see why. Online loan brokers, like East Bay Finance, connect borrowers with a network of lenders to find the best loan options. We offer a convenient online application process and provide personalised interest rates based on your financial situation and needs.
Online brokers can save you time and effort by comparing multiple loans on your behalf, so you can be sure you’re getting the best deal. And you only have to make one loan application! That makes using an online broker a very convenient option, and could also end up saving you a ton of money.
Application Process
Obtaining a loan involves several steps, but online brokers like East Bay Finance make the loan application process simple and straightforward.
- Determine Your Needs: Assess your financial situation and determine how much money you need, as well as the type of loan that best suits your needs.
- Apply Online: Complete our easy online application form. Our application process is designed to be simple and very fast – it takes just 2 minutes! You just give us some basic details and we’ll be in touch to complete your application.
- Gather Required Documents: Collect essential documents, such as proof of income, identification, and any relevant bank statements, to streamline the application process. We make this super easy – no need to send us actual documents, you can do it all electronically via our secure online portal. Even your statements!
- Await Approval: Once you’ve submitted your application, we’ll review your information and match you with suitable lenders. Approval times vary, but we aim to provide a response within one to two hours*.
- Receive Your Funds: Once your loan is approved and accepted, funds can be deposited into your account the same day*, and you can access them immediately or the next day, depending on your bank.
*Subject to responsible lending criteria
Loan Amounts and Terms
Understanding typical lending limits and loan terms is essential when considering a personal loan. Here’s what you can expect:
Typical Loan Ranges
Loan amounts vary depending on the lender and your financial situation. Banks and credit unions may offer higher borrowing limits, while finance companies and online brokers cater to smaller loan amounts.
East Bay Finance provides loan amounts from $2,000 to $75,000 for unsecured loans, while secured loans have limits of $150,000, or even more in some cases. This flexibility ensures you can find a loan that meets your needs.
Loan Terms and Duration
With East Bay Finance, loan terms typically range from 6 months to 7 years, allowing you to choose a repayment period that aligns with your financial goals. We offer competitive loan terms to maximise loan affordability, to make sure you can continue to make monthly repayments comfortably.
Repayment Calculations
Understanding how to calculate loan repayments is crucial when budgeting for a personal loan. Several factors affect repayment amounts, including interest rates, loan terms, and any additional fees.
To estimate your loan payments, use East Bay Finance’s online loan calculator. This tool allows you to input your desired loan amount and term, providing an estimate of weekly, fortnightly, or monthly repayment amounts.
Loans for Bad Credit
You might think that having a low credit score will make it challenging to secure a personal loan, but that’s not necessarily the case if you choose the right lender. Here’s how to improve your chances of obtaining a loan:
Why Credit Scores Matter
Credit scores are a reflection of your creditworthiness and influence a lender’s decision to approve your loan application. A higher credit score typically results in better loan terms and lower interest rates, while a lower score may attract higher rates.
The good news is, you can improve your credit score if it’s a bit on the low side. It just takes a bit of time and discipline. To improve your score, focus on paying bills and making loan repayments on time, reducing outstanding debt, and avoiding applying for new lines of credit. Over time, your credit score will go back up and you’ll be in a much better financial position.
How to Get a Loan with Bad Credit
If you have a low credit score, that can be a deal breaker for some lenders, but not for East Bay Finance. We understand that people need second chances, which is why we offer more options for individuals with poor credit.
By working with our network of low-cost lenders, we increase your chances of getting approved for a loan, even if your credit score is less than great. As long as you have a regular income and can cover your repayments, there’s a good chance we can find a positive outcome for you.
Why Choose East Bay Finance?
East Bay Finance stands out among competitors due to its personalised rates, flexible loan structure, and seamless online process.
Wide range of financial solutions:
- Debt Consolidation Loans
- Wedding Loans
- Quick Loans
- Emergency Loans
- Home Renovation Loans
- Business Loans
Competitive Rates: East Bay Finance offers extremely competitive interest rates starting at 9.95%, ensuring you receive a fair deal on your loan.
Flexible Loan Structure: With both secured and unsecured loan options and terms ranging from 6 months to 7 years, with East Bay Finance you can be sure you’re getting a fair deal.
Easy Online Process: Our user-friendly online application process makes applying for a loan quick and hassle-free.
Fast Approval and Payout: East Bay Finance aims to provide approval within one to two hours*, with funds available the same day or next morning.
Find out how we can help you find a fantastic deal on a loan today. Get in touch with us and one of our friendly loan advisors will be happy to chat with you about your situation.
*Subject to responsible lending criteria
