Unsecured Personal Loans

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Unsecured personal loans are one of the most popular types of personal finance available in New Zealand.

Funds you apply for with an unsecured personal loan can be used for almost any purpose, and loan applications can be approved without needing to provide a house or vehicle as security on the loan.

Before you apply, make sure you’ve considered any available government assistance schemes, and spoken to a financial adviser to accurately assess your borrowing capacity and financial stability.

What is an unsecured personal loan?

An unsecured personal loan is a type of finance product available in New Zealand that doesn’t require you to provide upfront security or collateral to secure the loan. Unsecured loans are similar in many ways to secured loans, but with a few key differences.

Unsecured personal loans have lending restrictions that can include:

  • Interest rates - up to a maximum of 49.99%
  • Borrowing Limits - between $1,000 and $30,000
  • Loan Terms - between six months and 5 years

As unsecured loans do not require you to provide any collateral when applying for the funds, this makes them riskier to approve by a lender. A higher risk to the lender translates to more restrictive loan conditions for the borrower, which means you’ll need to put in extra effort to get approved for higher loan amounts or to qualify for lower rates.

You can qualify for an unsecured personal loan in New Zealand if you are:

  • 18 years or over
  • Currently employed with a sufficiently stable income 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 an unsecured 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.

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Why get an unsecured personal loan?

Unsecured personal loans may not provide the same easy access to competitive low rates or maximum amounts that are available through secured finance, but there’s more than one reason they’re so popular with Kiwis.

4 Common Reasons To Get An Unsecured Personal Loan:

1. You can’t provide security on the loan

If you don’t own a home or a vehicle of sufficient value to offer a lender as security, an unsecured personal loan can allow you to access finance when you need it. This can be particularly common with younger borrowers who are looking to finance overseas travel.

2. You don’t want to provide security on the loan

The downside of providing security on a loan is that it’s locked in as collateral until the end of the loan term. If you’re using a vehicle as security, this means you can’t sell it to someone else without first notifying the lender (and generally providing replacement security). 

3. You don’t want to risk your assets

In the unlikely event that you’re consistently unable to meet your loan repayments with secured finance, the lender who gave you the money can take possession of the security provided and sell it to reclaim their losses. By using an unsecured personal loan, you can make sure that your assets will be protected. 

4. You want to buy an asset but can’t use it as security

A new car is easy to estimate the value on, and has a large market to sell to, which makes them one of the most popular forms of security. A vintage restored vehicle, however, has a much smaller market and may not be eligible as security - an unsecured personal loan can be used to finance your dream car regardless of what the lender thinks of it. 

How to use an unsecured personal loan

Putting aside the issues of collateral and security, one of the main reasons unsecured personal loans are so popular is the total freedom in how you use the funds. 

The bottom line is: If you want it, you can usually pay for it with an unsecured personal loan.

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