How to consolidate debt with a loan in New Zealand
Managing several debts at once — credit cards, store finance, personal loans — can quickly become stressful.
Multiple due dates, different interest rates, and penalty fees often make it harder to stay on top of your finances.
That’s why debt consolidation loans have become one of the most effective ways for Kiwis to simplify repayments and regain financial control.
By combining multiple debts into one loan with a single payment and (often) a lower interest rate, you can reduce your monthly stress and start working towards a debt-free future.
In this guide, you’ll learn how debt consolidation loans work in New Zealand, what to consider before applying, and which banks and financial providers can help.
✅ Eligibility & Criteria
To qualify for a debt consolidation loan in New Zealand, most lenders require:
- Minimum age of 18 years
- NZ citizenship, permanent residency, or a valid work visa
- Stable income (from employment, self-employment, or benefits)
- Proof of identity (passport or driver licence)
- Recent bank statements showing ability to meet repayments
- A reasonable credit history — though some lenders specialise in helping those with bad credit
Before approving your loan, the lender will review your income, expenses, and current debt levels to make sure you can afford the repayments.
💰 Main Types of Loans for Debt Consolidation
There are several types of loans you can use to consolidate debt in New Zealand. Here’s how they differ:
1️⃣ Personal Loans (Unsecured)
These loans don’t require collateral and are the most common choice for debt consolidation.
- ANZ Debt Consolidation Loan: Combines multiple debts into one fixed-rate personal loan. (anz.co.nz)
- Westpac NZ: Allows combining credit card balances and other loans into a single payment. (westpac.co.nz)
- AA Money: Offers secured or unsecured consolidation loans, depending on your financial position. (aamoney.co.nz)
2️⃣ Secured Loans
If you have a car or home, you can use it as security to access lower interest rates.
- MTF Finance: Provides secured consolidation loans, with decisions often made the same day. (mtf.co.nz)
- AA Money and The Co-operative Bank also offer similar secured options.
3️⃣ Credit Union Loans
Credit unions like First Credit Union offer community-based lending with fair rates, typically from 10.95 % – 18 % p.a. and no early repayment fees. (firstcreditunion.co.nz)
4️⃣ Social / Microfinance Programmes
For Kiwis facing financial hardship, DEBTsolve (supported by MSD) helps consolidate harmful debts up to NZ $15,000 with affordable repayment terms. (msd.govt.nz)
📝 How to Apply — Step by Step
If you’re ready to consolidate your debts, follow this simple roadmap:
- List all current debts — note amounts, due dates, and interest rates.
- Check your credit report — available free at creditsimple.co.nz or equifax.co.nz.
- Compare lenders — review interest rates, fees, and repayment options.
- Calculate repayments — use online calculators (e.g. moneyhub.co.nz).
- Gather required documents — ID, proof of income, bank statements, and details of current debts.
- Apply online or in branch — most NZ banks and lenders offer online applications.
- Approval and settlement — if approved, your new lender pays off your existing debts directly or deposits the amount into your account to do so.
- Make one repayment — enjoy the simplicity of one set date, one interest rate, one contract.
💹 Comparing Offers and Interest Rates
The main benefit of debt consolidation is usually a lower interest rate than what you were paying before.
Here’s a general idea of current market rates (2025):
| Lender | Type | Approx. Interest Rate | Notes |
|---|---|---|---|
| ANZ Bank | Personal | 9.95 % – 18.95 % | Fixed term, up to 7 years |
| Westpac NZ | Personal | 8.49 % – 17.99 % | Flexible repayments |
| MTF Finance | Secured | 9 % – 18 % | Fast decision, collateral required |
| First Credit Union | Credit Union | 10.95 % – 18 % | Community-based, low fees |
| AA Money | Secured / Unsecured | from 10.49 % | Vehicle or personal collateral |
| DEBTsolve (MSD) | Social | Low / capped | For vulnerable borrowers |
When comparing, look at:
- The annual percentage rate (APR)
- Establishment and early repayment fees
- Repayment flexibility (extra payments, frequency)
- Total cost over the loan’s lifetime
💡 Tips to Make Debt Consolidation Work
- ✅ Do not borrow more than the total of your existing debts.
- ✅ Close or freeze old credit cards once debts are consolidated.
- ✅ Budget carefully to avoid new debt while repaying.
- ✅ Avoid payday loans — they’ll worsen your situation.
- ✅ Automate repayments so you never miss a payment.
- ✅ If possible, refinance again later when your credit improves for even better rates.
Debt consolidation only works if you stay disciplined — it’s a tool, not a magic solution.
📞 Resources and Useful Contacts
| Institution / Programme | Type | Contact / Website |
|---|---|---|
| ANZ New Zealand | Personal debt consolidation | anz.co.nz • 0800 837 123 |
| Westpac NZ | Personal loan consolidation | westpac.co.nz • 0800 177 277 |
| MTF Finance | Secured consolidation loans | mtf.co.nz |
| AA Money | Personal & car-secured loans | aamoney.co.nz |
| First Credit Union | Credit union debt loans | firstcreditunion.co.nz |
| DEBTsolve / MSD | Microfinance consolidation | msd.govt.nz |
| MoneyTalks NZ | Free debt advice | moneytalks.co.nz • 0800 345 123 |
❓ FAQ / Frequently Asked Questions
1. What is a debt consolidation loan?
It’s a single loan used to pay off multiple debts, leaving you with one manageable repayment.
2. Does it really save money?
Yes — if your new interest rate and fees are lower than your current debts.
3. Can I consolidate if I have bad credit?
Some lenders (like MTF Finance or Credit Unions) accept borrowers with fair or limited credit.
4. Will it hurt my credit score?
A small dip may occur initially, but long-term on-time repayments will improve your score.
5. Can I include my credit card debt?
Absolutely — most debt consolidation loans are designed for this.