Published: 1st February, 2024
Last Updated: 27 June, 2026
Author: Murray Greig, Founder of Loansmart
What Is A Living Expenses Loan?
A living expenses loan is a personal loan that can help cover essential costs such as rent, groceries, utilities, insurance and transport during temporary financial hardship. If you’re struggling with multiple debts, a debt consolidation loan may be a better option, as it can combine existing high-interest debts into one more affordable repayment while improving household cash flow. Before borrowing, it’s important to ensure the repayments are affordable and suitable for your financial circumstances.
Key Takeaways: Cost Of Living Loans
- A personal loan can be used to help cover living expenses such as rent, groceries, utilities and transport during temporary financial hardship.
- Debt consolidation may reduce monthly repayments by combining multiple high-interest debts into a single lower-cost loan with a longer repayment term.
- Because lenders assess affordability as part of the loan approval process, reducing your monthly debt repayments may improve your affordability and increase your ability to qualify for additional lending, subject to lender criteria and responsible lending requirements.
- A lower monthly repayment can improve household cash flow, although a longer loan term may increase the total interest paid.
- Loansmart compares multiple New Zealand lenders to find suitable unsecured loan options.
Rising living costs continue to place pressure on many New Zealand households. Higher housing costs, groceries, fuel, insurance, utilities and other everyday expenses have made it increasingly difficult for some people to balance their household budgets. Increased prices and stagnant wages leave many people on the verge of financial instability.
A cost of living loan, also known as a living expenses loan, is a personal loan that can be used to help cover essential expenses during a temporary period of financial pressure. Borrowers commonly use these loans to pay for rent or mortgage payments, groceries, power bills, transport costs, insurance and other necessary household expenses. This guide explains how living expenses loans work, who they may be suitable for, and the factors you should consider before borrowing money to cover everyday expenses.
Why the cost of living has increased
Why Has the Cost of Living Increased?
Although annual inflation in New Zealand has eased to 3.1% in the year to the March 2026 quarter, according to Stats NZ, many everyday expenses remain significantly higher than they were just a few years ago. While the overall rate of price increases has slowed, households continue to feel the impact of higher costs for essential items such as electricity, groceries, insurance, housing and transport.
As a result, many New Zealand families are finding it harder to balance their household budgets. Even people with stable employment and regular incomes can experience temporary cash-flow shortages when unexpected expenses arise or existing debt repayments become difficult to manage.
Source: Stats NZ – Annual inflation at 3.1 percent in March 2026 quarter.
What is a living expenses loan?
A living expenses loan, or cost of living loan, is a loan that you can take out to cover your daily expenses, such as rent, food, bills, and other living costs.
These loans can be short-term or long-term, and they can be secured or unsecured. You can use the loan to help cover a specific period of time or as an ongoing source of funding for your regular expenses.
Should you get a loan for living expenses?
Before getting a loan for living expenses, you need to consider your current financial situation.
If you’re already struggling to manage your money, borrowing more could make things worse.
However, if you have a stable income and can afford the repayments, a cost-of-living loan could help you stay afloat during financially difficult times.
You should also compare interest rates and fees from various lenders to find the best deal.
What are the benefits of a living expenses loan?
A living expenses loan can provide a few benefits, including both short-term and long-term perks.
Short-term advantages include the ability to stay current on your bills, preventing late fees or service cutoffs. Also, they’re a better option than buy now pay later or high-interest credit card debt if you get a good interest rate.
Long-term benefits include the chance to build credit and increase your financial stability.
How could a debt consolidation loan help keep down costs?
One way to get the money you need to cover the increasing cost of living, while also lowering your loan repayments, is through a debt consolidation loan.
Debt consolidation combines multiple existing debts into a single loan. Depending on the interest rate and repayment term, this can reduce your regular monthly repayments, improve household cash flow and make your finances easier to manage. Because lenders assess affordability when reviewing loan applications, lower monthly repayments may also improve your ability to qualify for future lending, subject to lender criteria and responsible lending requirements.
Overall, it can be better to take out one larger loan over a longer period of time, than to have lots of small loans, or use credit cards or buy now pay later services like Afterpay.
Loansmart specialists in providing debt consolidation loans to Kiwis who want to get themselves in a better financial position, and lower their loan payments.
One recent example is the King family, who were drowning in a large amount of high-interest debt and had a poor credit score. The Loansmart team consolidated several of their high-interest loans into a new loan over a longer period, lowering their monthly loan payments from $2,000 to just $740! Plus, they ended up with $5,000 cash to complete much-needed house renovations.
Debt consolidation loans can be a great solution to help people on the path to better financial health. The following table provides examples of how Loansmart has helped New Zealand borrowers improve their financial position through debt consolidation.
| Weekly Savings | Client | Main Issue | Loansmart Solution |
|---|---|---|---|
|
$840/week |
Shaun (Good Credit) |
$33k high-interest loan costing $1,100/week. Needed $10k loan. |
$43k consolidation loan & repayments reduced by $260/week |
What are some ways to manage increasing living costs?
Borrowing money to cover ongoing expenses isn’t always the best solution. However, there are ways to manage increasing living costs independently.
You can start by creating a budget, so you have a clear understanding of your expenses and can identify areas where you could make cutbacks.
Shop around for good deals on items you regularly buy, avoid impulse purchases, and maintain a good credit score so you can qualify for more favourable loans and credit cards.
How Loansmart can help you manage your living expenses
Choosing Loansmart is the smart way to get a handle on your finances. We move fast to get you the results you need, quickly. With our 3-minute online application and same-day approval, you’ll have the cash you need in no time.
When you apply for a loan through Loansmart, we scout various lenders to find you the best deal. As a result, you only have to submit one loan application, but it gets reviewed by multiple lenders. Your credit score can be negatively affected if you apply for too many loans, so you should make as few loan applications as possible.
Rather than you jumping through hoops, Loansmart does the heavy lifting for you. Simply choose the best deal for you, and we’ll handle the rest. The money you need will be at your fingertips on fair terms before you know it.
Contact Loansmart today for a free, no-obligation chat about your financial goals.
Cost Of lLving Loans FAQs
Yes, it is possible to use a personal loan to cover essential living expenses such as groceries, utilities, transport or other everyday costs, provided you meet the lender’s approval criteria.
Yes, many lenders allow personal loans to be used for essential expenses such as rent, mortgage payments, electricity, insurance, rates and other household bills. The loan must be used responsibly, and approval depends on factors such as your income, existing financial commitments and ability to afford the repayments. If you’re struggling with multiple debts as well as living expenses, a debt consolidation loan may also be worth considering.
Yes, a living expenses loan can be a good idea, especially if you’re starting to fall behind on repayments. Missing loan or credit card payments can lead to additional fees and negatively affect your credit history.
Rather than simply borrowing more money, a debt consolidation loan may allow you to combine multiple high-interest debts into one more affordable repayment while also accessing the extra funds you need for everyday living expenses. This can help improve your cash flow and make it easier to stay on top of your finances.
