Low Income Personal Loans

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Borrowing money while only receiving a part-time salary or a minimum-wage income can be difficult if you’re unable to meet lender criteria.

In New Zealand, there are a number of options available to individuals on a limited income who require financial assistance.

If you’ve exhausted all other options for government support, there are lenders who offer short-term finance to borrowers that do not meet standard income criteria for approval.

What are low-income personal loans?

Low-income personal loans are generally short-term, low-limit personal loans that can be used if you do not qualify for available government assistance grants or Work and Income New Zealand (WINZ) support payments.

Personal loans for low-income borrowers often have significantly lower maximum borrowing amounts, both to reduce the risk for the lender and to ensure borrowers pay minimal interest charges.

Most low-income personal loans have borrowing limits of $2,000-$3,000.

Personal loans if you have low income

The majority of lenders in New Zealand that offer low-income personal loans require a minimum income of $400-$500 per week (net income). 

The available terms vary between lenders but are usually only available for a minimum of three months and a maximum of three years.

You can qualify for a low-income personal loan in New Zealand if you are:

  • 18 years or over
  • Currently employed and can demonstrate the ability to repay the loan amount
  • A permanent NZ resident or hold a work permit or visa allowing you to reside in New Zealand

If you meet the standard qualifying criteria for a personal loan, you can calculate how much you can borrow and compare lenders to find the best loan offers available in New Zealand before applying for a loan.

If you're experiencing financial hardship and struggling with debt, you may find speaking to a financial expert can help determine your next steps.

You can speak to an expert for free by calling the MoneyTalks helpline operated by FinCap on 0800 345 123.

MoneyTalks Helpline operates between 8 a.m. and 5 p.m. Monday to Friday, and between 10 a.m. and 2 p.m. on Saturdays.

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Using a guarantor when you have a low income

If you don’t meet the standard criteria for personal loan approval, another option is to consider including a guarantor as part of your application.

A guarantor is someone who agrees to take responsibility for the loan repayments should you be unable to.

If you are applying for a low-income loan using a guarantor, it’s important to understand that your guarantor will be legally responsible for the loan repayments should you be unable or unwilling to make them.

This can also affect the guarantor in a number of other ways:

  • They will need to disclose information about their role as guarantor on your loan if they choose to apply for any other form of finance before the loan is repaid in full
  • Any collateral or security owned by the guarantor that is used to secure your loan cannot be used as security on another loan until your loan is repaid in full
  • Any collateral or security owned by the guarantor that is used to secure your loan cannot be sold or altered by the guarantor until your loan is repaid in full

Due to these restrictions, and the ongoing legal responsibility of the guarantor to the loan repayments, guarantors are often close family members or a trusted person you have an extensive, established relationship with. 

You should first sit down and talk openly with your potential guarantor to ensure they understand their responsibilities, how it may affect their own future credit applications, and that your relationship is stable enough to remain unaffected by both of these throughout the term of your loan. 

See If You Qualify For A Low Income Personal Loan

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