Should I get a personal loan?

When you can benefit from borrowing — and might want to steer clear.

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A personal loan might not be an obvious choice if you’ve never before borrowed money for anything other than university fees. But a loan can help you avoid taking on other kinds of debt that are more difficult to repay.

However, there are situations where it might not be the best option – we’ll look at these in more detail below.

Harmoney Unsecured Personal Loan

Harmoney Unsecured Personal Loan


6.99 % p.a.


  • Borrow from $2,000
  • 100% online
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100% confidential application

Harmoney Unsecured Personal Loan

Apply today to get approved within minutes for up to $50,000.

  • Max. loan amount: $50,000
  • Loan term: Up to 60 months
  • Turnaround time: 99% of approved online applications funded in 24 hours
  • Fees: Establishment fee of $200 for loans from $2,000-$5,000 and $450 for loans from $5,000-$50,000
  • No early repayment fees
  • Personalised interest rates based on your circumstances
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How do personal loans work?

A personal loan is money you borrow in one lump sum — typically between $2,000 and $50,000 — from a bank, credit union or online lender. You can use a personal loan for most legitimate personal expenses and to consolidate your debt, though some lenders won’t allow you to apply the funds toward education or investments.

When should I use a personal loan?

Personal loans are useful tools that can help you save money and time when you’re juggling existing debt, facing specific types of bills or looking to leverage improved credit.

If you’re struggling with credit card debt

A top reason borrowers take out a personal loan is to consolidate and pay off credit card debt. Debt consolidation involves taking out a personal loan in the amount that you owe on your existing credit cards and using the funds to pay off your creditors, ideally at a lower rate than the average you’re paying today. You repay your loan with fixed monthly repayments over a set period of time — usually up to 60 months (five years).

Because personal loans typically have lower interest rates than credit cards, you can save on unnecessary interest. If you consolidate two or more bills, you also simplify your life by paying one monthly payment to one lender.

Compare debt consolidation loans

If you have a personal loan and your credit has improved

If your credit score has improved or you’re making more money than you did when you originally took out an existing loan, you might be able to save money by refinancing.

Refinancing involves taking out a new personal loan to pay off a loan you already have in your name. While many borrowers refinance to take advantage of a more favourable rate, you can also refinance to take a cosigner off your loan or lower your monthly repayments.

How refinancing works on a personal loan

If you have an expense you can’t put off

You need to buy a plane ticket, but you don’t have the time to save up for it. Or maybe you need to move cities for a new job, but you don’t have the savings on hand.

In these cases, a personal loan can help you get funds you need to take advantage of an opportunity. While it’ll cost you more than paying up front, that once-in-a-lifetime adventure or more lucrative job could outweigh what you’ll pay in interest.

If your insurance won’t cover a medical procedure

A personal loan isn’t always the best choice for covering the costs of an upcoming medical procedure. But if your only other option is in-house financing, you might find a better deal with a personal loan provider.

Ask your medical provider about its in-house rates and terms before you shop around to make sure you’re getting the most competitive offer you’re eligible for.

Compare your medical financing options

Compare personal loans you can apply for today

Updated March 29th, 2020
Name Product Interest Rate (p.a.) Min. Loan Amount Max. Loan Amount Loan Term Monthly Service Fee Application Fee
Harmoney Unsecured Personal Loan
6.99% - 29.99%
Up to 60 months
$200-$450 depending on loan size
Apply for an unsecured personal loan up to $50,000 with no early repayment fees. Eligibility: Be a NZ resident/citizen and have a good credit score.
Nectar Personal Loan
8.95% - 29.95%
Up to 4 years
Unsecured loans from $1,000 with payouts made within one day of approval. Applications entirely online. Eligibility: Must be 18+, an NZ citizen or permanent resident, and have an income of $350 per week or more (after tax).
Pronto Secured Personal Loan
11.97% - 29.97%
Up to 60 months
Secured personal loans of up to $20,000 with approvals in under 10 minutes. Eligibility: Be an 18+ and a resident of New Zealand.
Stadium Finance Personal Loan
9.95% - 19.95%
Up to 60 months
Varies with lender
Stadium Finance negotiates loan terms with a network of lenders. Borrow between $3,000 to $100,000 and funds paid within one day of approval. Eligibility: Must be 18+. Other requirements depend specific lender.
Lending Crowd Personal Loan
3 or 5 years
$250-$1,450 depending on the amount borrowed
A secured personal loan from $2,000 to $200,000 with repayment instalment options. Eligibility: Be an 18+ NZ permanent resident, earn $30,000 or more, have a good credit history and collateral/security.
QuickLoans Personal Loan
9.95% - 23.95%
Up to 36 months
$95-$595 depending on loan size
Borrow up to $20,000 and apply online within 5 minutes. Eligibility: Be over 18, hold permanent NZ residency, have collateral/security, earn at least $450 per week.
NZCU South Personal Loan (Unsecured)
10.90% – 28.90%
Up to 7 years
An unsecured personal loan up to $60,000 with personalised repayment options. Eligibility: Be an 18+ permanent NZ resident or non-resident on a working visa, earn $500+ weekly.
NZCU South Personal Loan (Secured)
8.90% - 27.90%
Up to 7 years
A secured personal loan up to $60,000 with personalised repayment options. Eligibility: Be an 18+ permanent NZ resident or non-resident on a working visa, earn $500+ weekly.
Admiral Finance Secured Personal Loan
13.95% - 23.95%
Up to 60 months
$125-$595 depending on loan size
A secured loan from $1,000 to $50,000 with a quick online application process. Eligibility: Be an 18+ permanent NZ resident, have collateral/security, earn at least $450 per week.

Compare up to 4 providers

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When should I not use a personal loan?

A personal loan can offer lower rates than credit cards and other forms of debts. But it might not be the best solution under a few key circumstances.

If you can easily save the money

Have your eye on a luxury item or feeling the itch for an exciting holiday? If your needs aren’t immediate, you might want to work out how much your repayments would be and save that amount each month instead. Otherwise, you could be paying for your splurge many years later.

If it’s a bad investment

Are you thinking of borrowing for home improvements or another investment? Make sure it’s bound to add value in the long run, otherwise you could be left paying interest on an improvement that ultimately lost you money.

If your income and employment aren’t stable

Taking out a personal loan when your finances are unsteady could hurt you in the long run. If you have reason to think your income or employment situation might change for the worse, consider cutting back on expenses or putting money away in a high-yield savings account instead.

Should I use a personal loan to improve my credit score?

Not necessarily. While repaying a personal loan on time can improve your credit score, it’s not always the cheapest way to do so. If you’re able to qualify for a credit card on your own, paying off your purchases before your next payment is due is a cost-free way to improve your credit rating.

5 tips for taking out a personal loan

Ready to take out a personal loan? Follow these strategies to narrow down the right one for your situation.

  1. Know your credit score. Many lenders require minimum credit scores. Check your score for free so that you know where you stand, making it easier to find a loan you’ll qualify for.
  2. Compare lenders. Research and weigh as many lenders as possible to find the best rates and terms for your needs.
  3. Prequalify with providers. Narrowed your options down to a few? Complete each lender’s prequalification application to learn the rates and terms you might qualify. Prequalification is based on a soft credit pull that doesn’t affect your credit score.
  4. Consider the fees. An APR represents your loan’s rates and fees as a percentage. But it doesn’t include late fees or prepayment penalties. It also doesn’t tell you when and how you’ll pay common personal loan fees.
  5. Go for the shortest term you can afford. You might be tempted by a longer term’s lower monthly repayments. But you’ll likely end up paying a lot more in interest over the lifetime of your loan.

Bottom line

A personal loan is a valuable tool that can help you cover a large one-time expense you can’t put off or consolidate multiple debts. But at the end of the day, you’re still borrowing money with interest. Make sure the benefits outweigh any drawbacks for your situation.

Read our guide to personal loans to learn out more about these products work and compare top lenders.

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Frequently asked questions

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