How to get a loan with bad credit in New Zealand
Having bad credit doesn’t mean you can’t get a loan in New Zealand — it just means you’ll need to take a smarter, more strategic approach.
Many Kiwis face setbacks such as missed payments, defaults, or debt collection marks on their credit reports.
Yet, with responsible lenders, government-backed programmes, and secured options available, there are still safe and legal ways to borrow money even if your credit score isn’t perfect.
This guide explains how to understand your credit position, what lenders look for, and the most reliable ways to access finance in NZ — without falling into another debt trap.
🧾 Understanding “Bad Credit”
“Bad credit” simply refers to a borrower’s low credit score or history of missed payments reported by agencies such as Equifax, Centrix, or Illion.
In New Zealand, common causes of bad credit include:
- Late or missed loan and credit-card payments
- Defaults registered by utilities or lenders
- Court judgments or debt-collection activity
- Applying for too many loans in a short period
📊 You can check your credit report for free at:
Knowing your credit standing helps you plan which lenders or loan types you actually qualify for.
💰 Loan Options for People with Bad Credit
Not all lenders treat credit history the same way. Here are your main options if your score isn’t ideal:
1️⃣ Secured Loans (Collateral-based)
These loans require an asset — such as a car, boat, or property — as security.
Because the lender has lower risk, interest rates are often better than unsecured bad-credit loans.
- Example: Instant Finance offers secured personal loans even for borrowers with past defaults. (instantfinance.co.nz)
2️⃣ Unsecured “Bad Credit” or “Second Chance” Loans
These are designed specifically for people with poor credit who can prove steady income.
- Example: Loansmart NZ and Max Loans provide tailored “second-chance” products with responsible-lending checks. (loansmart.co.nz, maxloans.co.nz)
3️⃣ Credit-Union or Community Loans
Credit unions like First Credit Union and Unity Money take a more personal approach, assessing affordability and circumstances rather than scores alone.
4️⃣ Ethical or Microfinance Options
If your financial hardship is significant, consider Good Shepherd NZ’s “Good Loans” programme — no-interest loans of up to NZ $7,000 for essential needs. (goodshepherd.org.nz)
📝 How to Apply — Step by Step
Applying for a loan with bad credit follows the same structure as any other loan — but requires more preparation and transparency.
- Check your credit report – identify and dispute any errors.
- Evaluate your income and expenses – ensure you can afford repayments.
- Choose the right lender – focus on registered, responsible NZ providers.
- Gather documents – ID, proof of address, payslips, 3 months’ bank statements.
- Apply online or in-person – most lenders accept secure online submissions.
- Be honest about your history – lenders appreciate transparency more than omissions.
- Provide collateral – if possible, offer an asset to lower the perceived risk.
- Wait for assessment – approvals may take longer (24–72 hours) for bad-credit cases.
Once approved, funds are usually paid directly into your NZ bank account, often within one business day.
📉 Comparing Rates & Costs
Because bad-credit loans carry higher risk, rates are usually higher — but they vary widely between lenders.
| Lender | Loan Type | Typical Interest (p.a.) | Notes |
|---|---|---|---|
| Instant Finance | Secured / Unsecured | 14 % – 29 % | Loans for bad-credit borrowers; accepts benefit income. |
| Loansmart NZ | Bad Credit Loans | 12 % – 26 % | Fast approval; case-by-case assessment. |
| Max Loans NZ | Second-Chance Loans | 8.99 % – 24 % | Online pre-approval available. |
| Unity Money | Credit-Union | 10 % – 18 % | Member-owned; fair-rate lending. |
| Good Shepherd NZ | Good Loans (Ethical) | 0 % | For essential items and debt relief. |
Always compare APR (Annual Percentage Rate), fees, and total repayment amount before committing.
⚙️ How Lenders Assess You
Under the Credit Contracts and Consumer Finance Act (CCCFA), every lender must prove the loan is “suitable and affordable.”
They will check:
- Your income vs expenses (affordability test)
- Bank statements (cash-flow stability)
- Employment history
- Credit file (for previous defaults or judgments)
- Asset position (for secured loans)
Even if your score is poor, strong affordability or a secured asset can offset the risk.
💡 Tips to Improve Your Chances
- ✅ Pay down existing debts before applying.
- ✅ Show consistent income deposits over 3 months.
- ✅ Avoid payday loans — they often worsen credit scores.
- ✅ Offer collateral (car, savings, or guarantor).
- ✅ Work with credit unions — they’re more flexible than major banks.
- ✅ Request a smaller amount and repay it early to rebuild credibility.
Small, successful repayments over time help repair your credit — turning a “bad credit” situation into a stepping stone toward financial recovery.
📞 Trusted Resources & Contacts
| Organisation | Purpose | Website / Phone |
|---|---|---|
| Instant Finance NZ | Secured / bad-credit loans | instantfinance.co.nz |
| Loansmart NZ | Second-chance loans | loansmart.co.nz |
| Max Loans NZ | Bad-credit personal loans | maxloans.co.nz |
| Unity Money | Community credit union | unitymoney.co.nz |
| Good Shepherd NZ | No-interest ethical loans | goodshepherd.org.nz • 0800 466 370 |
| MoneyTalks NZ | Free financial advice | moneytalks.co.nz • 0800 345 123 |
| Consumer Protection NZ | Loan rights & legal info | consumerprotection.govt.nz |
❓ FAQ / Frequently Asked Questions
1. Can I really get a loan with bad credit in NZ?
Yes — many lenders focus on affordability, not just your score.
2. What’s the easiest type of loan to get with bad credit?
Secured loans (with collateral) are easiest because they reduce lender risk.
3. Does applying for multiple loans hurt my score?
Yes — each application triggers a credit enquiry, which can lower your score temporarily.
4. Can I rebuild my credit after a bad-credit loan?
Absolutely — consistent, on-time payments improve your score within months.
5. Are “no credit check” loans legal in NZ?
Lenders must assess affordability under the CCCFA, so a full “no-check” loan is rare and often risky.