When looking for a personal loan in New Zealand, one of the biggest decisions you’ll need to make is whether to go for a secured or unsecured loan. Each option has its pros and cons, and the right one depends on your financial situation, what you need the money for, and how comfortable you are using your assets as security.
Let’s break down the differences, explore the benefits and drawbacks, and help you decide what’s best for you as a Kiwi borrower.
What are the Pros & Cons of a Secured Loan?
A secured loan is backed by an asset – usually your car, house, or other valuable property. This asset acts as security for the lender, meaning if you default on the loan, they have the legal right to take possession of the asset to recover their money.
Common examples:
- Car loans (where the car is the security)
- Home equity loans
- Secured personal loans
Pros:
- Lower interest rates – Since the lender has something to fall back on, they’re taking on less risk, so you’re likely to get a better rate.
- Larger borrowing amounts – You can usually borrow more money compared to unsecured loans.
- Higher chance of approval – Even if your credit isn’t perfect, having an asset to secure the loan increases your chances.
Cons:
- Risk of losing your asset – If you can’t make repayments, the lender could repossess whatever you put up as security, such as your car.
- Slower approval process – There’s often a bit more paperwork and valuation involved.
- You need to own something valuable – Not ideal if you don’t have a car, house, or other asset.
What are the Pros & Cons of an Unsecured Loan?
An unsecured loan doesn’t require any collateral. Instead, the lender assesses your credit history, income, and other financial details to determine whether to lend you money and at what interest rate.
Common examples:
- Personal loans
- Debt consolidation loans
- Credit cards
Pros:
- No risk to your assets – Since there’s no security involved, you won’t lose your car or house if things go wrong (though your credit rating will still take a hit).
- Quick and easy process – Approval is often faster because there’s no asset to value or secure.
- Ideal for renters or younger borrowers – Great if you don’t yet own major assets.
Cons:
- Higher interest rates – Lenders take on more risk, so rates are typically higher.
- Smaller loan amounts – You’re likely to be offered less than with a secured loan.
- Stricter credit checks – Having good credit definitely helps get approval for an unsecured loan, but it’s not a deal breaker, especially when you work with East Bay Finance (learn more about how we help people with bad credit).
Secured vs Unsecured Loans: Which One Is Right for You?
Here’s a quick comparison to help you decide:
| Feature | Secured Loan | Unsecured Loan |
|---|---|---|
| Requires collateral? | Yes | No |
| Interest rates | Lower | Higher |
| Loan amount | Up to $150,000 | Up to $75,000 |
| Approval speed | Medium | Fast |
| Credit requirements | More flexible | Stricter |
| Risk to borrower | Asset can be repossessed | No asset risk, but credit damage possible |
Let’s look at a few real-world scenarios:
Scenario 1: You Own a Car and Need a Large Loan
If you need $50,000 for home renovations and you own a car worth $25,000 outright, a secured loan could give you access to the funds you need at a lower interest rate – possibly from just 9.95%.
Scenario 2: You’re Renting and Need to Consolidate Debt
You have a few credit cards and want to tidy up your finances with a $15,000 debt consolidation loan. An unsecured loan might suit you best – you can apply online in 2 minutes and get approval within 1-2 hours*, without needing to put anything on the line.
Credit Score Considerations
One of the most common concerns for borrowers is: What if I have bad credit?
Here’s the good news: at East Bay Finance, bad credit isn’t a deal breaker. We work with a wide network of lenders – including those who specialise in helping people with less-than-perfect credit histories.
For secured loans, lenders may be more willing to look past your credit issues if you have valuable security. For unsecured loans, a lower credit score might affect your interest rate or the amount you can borrow – but we’ll still do our best to find you a deal that works.
Applying for a Loan – How We Make It Easy
At East Bay Finance, our job is to make this process smooth and stress-free. Whether you’re leaning toward a secured or unsecured loan, here’s how we help:
- Access to multiple lenders – More options means better chances of approval and better rates.
- Fast turnaround – Apply online in just 2 minutes. You could get approved in 1–2 hours* and have the money the same day*.
- Loan options up to $150,000 – Whether you’re consolidating debt, buying a car, renovating, or planning a wedding – we’ve got you covered.
- No hoop jumping required – 100% online, hassle-free process.
Our expert advisors are based right here in New Zealand. We understand local needs, and we’re here to talk through your options in plain English – no jargon, no pressure.
Making the Right Choice
There’s no one-size-fits-all when it comes to loans. A secured loan might be right for you if:
- You need a larger amount.
- You want the lowest possible interest rate.
- You have an asset you’re comfortable using as security.
On the other hand, an unsecured loan could be the better choice if:
- You don’t own any assets.
- You want a fast and easy approval process.
- You’re borrowing a smaller amount.
Either way, it pays to talk to a broker. At East Bay Finance, we’re here to listen, give you personalised advice, and do all the legwork to match you with the right lender.
Need help deciding?
Talk to one of our friendly loan advisors today. Whether it’s secured or unsecured, we’ll help you get the right loan for your situation – fast.
