Having a low credit rating can feel like a permanent hurdle to getting finance approval, but the good news is that there are many other factors used to assess your loan application.
There are some lenders in New Zealand who will approve your finance application even with a low credit score, while there are others that won’t include it as part of their assessment criteria.
However, lenders that will overlook or ignore your credit score entirely often have other criteria you’ll need to meet, and it’s important to understand your options and this unique application process before submitting a loan application.
There are usually three ways to get finance in New Zealand without a credit check:
If you own an asset of considerable value, you may qualify for a secured loan by offering the asset to a lender as collateral on the loan amount. Lenders have specific criteria for what they will accept as collateral, so it’s important to make sure your chosen asset will qualify as security before you submit an application.
If you don’t own any assets to offer as security (or don’t want to) then your next option is an unsecured personal loan. Lenders who offer unsecured loans without a credit check will require significant documentation and evidence that you are currently in a position to make regular repayments, and that your situation is stable enough to fulfil your repayment obligations over the full term of the loan.
If you don’t qualify for a secured or unsecured personal loan, you may find some lenders that offer specialist short-term loans without a credit check. These loans will often have restrictive conditions, such as lower borrowing limits, higher initial fees, and much lower terms than other types of finance.
You can qualify for a no credit check personal loan in New Zealand if you are:
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.
Lenders that offer specialist short-term loans without the need for a credit check will often require you to meet other (often stricter) criteria than you would when making a standard loan application.
This may require you to have a certain level of regular income, provide an asset of approved value to act as security on the loan, or include 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. They also use the value of their own borrower profile (and available collateral), to show stability to the lender and potentially help an applicant get approved for a loan, usually when the applicant cannot gain approval by themselves.
Before you apply with a lender, make sure you fully understand their application process and criteria for loan approval to avoid delays in receiving your money or a declined application.
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.
Here are some things to look out for when comparing your options:
Make sure you review your loan agreement before you accept and sign a loan contract. Upfront fees (such as application fees) are often a one-time charge, but some lenders include ongoing fees that can increase your estimated repayments.
Whether it’s penalties for missing a payment or making an extra repayment early, finding a lender that offers minimal penalties and flexibility in how you repay your loan could help you avoid paying more money than you need to.
Calculate your repayments over the term of your loan and make sure you can comfortably repay them. A shorter term will mean your regular repayments are higher, while a longer term will mean paying a greater amount of interest overall.
Some lenders may offer you flexibility in choosing the frequency and the day of your repayments. Your repayment schedule will ideally match your income schedule so that you are less likely to miss a payment.
Although New Zealand has a fairly transparent loan market, there are still those that will take advantage of borrowers in unfortunate situations. Make sure that you research a lender before applying, and try to find authentic reviews of their customer service team, contact availability, and overall lending reputation with borrowers.