Unsecured personal loans are basically a way for you to borrow cash without having to put up anything valuable, like your house or car, as collateral.
They’re becoming a go-to option in New Zealand for people who want a bit more freedom when it comes to borrowing.
Whether you need some quick cash for an unexpected bill, want to pay off existing debt, or need funds for a personal project, these loans can be a fast way to get what you need.
Since you don’t have to back it with any assets, a lot of people find this super attractive.
Just remember to weigh the pros and cons before jumping in to make sure an unsecured personal loan is right for you.
What is an Unsecured Personal Loan?
An unsecured personal loan is a type of loan that doesn’t require any collateral to secure the loan amount.
This is different to a secured loan, where a valuable asset is put up against the loan as security.
In this situation, the lender has the right to claim back your asset (like a home or vehicle) if you fail to repay.
On the other hand, unsecured loans are based solely on your creditworthiness.
The lender evaluates your financial history, credit score, income, and other relevant factors to determine your ability to repay the loan.
In New Zealand, unsecured personal loans typically range from a few hundred up to tens of thousands of dollars and can be used for a variety of purposes, including:
- Debt Consolidation: Combining multiple debts into one easier payment, often with lower interest rates.
- Emergency Expenses: Covering unexpected costs like urgent repairs that come up.
- Home Improvements: Funding renovations that can ultimately add value to your property.
- Personal Projects: Financing a holiday, wedding, or any personal goal that requires additional funds.
Benefits of unsecured loans
Fast Approval
One of the biggest advantages of unsecured personal loans is their fast approval process. Because there’s no need to evaluate collateral, lenders can approve your loan quickly—with Loansmart, that’s usually within just a few hours*. This is especially beneficial if you need funds urgently, like for emergencies or unexpected repairs.
*Subject to responsible lending criteria
Flexible Use of Funds
Unsecured personal loans offer great flexibility when it comes to how you can use the funds. Whether you’re consolidating debt, financing a wedding, taking a holiday, or making home improvements, you can use the loan amount however you see fit. This flexibility allows you to manage your financial needs without any restrictions.
No Risk of Losing Assets
Since unsecured personal loans don’t require collateral, there’s no risk of losing your property or car if you default on the loan. While it’s still crucial to meet your repayment obligations to avoid credit score damage and additional fees, the absence of collateral provides peace of mind that your assets are safe.
How much can I borrow?
With Loansmart, you can borrow up to $75,000 with an unsecured personal loan.
This amount can go a long way in covering significant expenses, giving you the financial support you need without the burden of high interest rates associated with credit cards.
Want to know how much you could borrow, and what your repayments would be?
Try our free online loan calculator.
Is an unsecured loan right for me?
If you want to borrow less than the unsecured limit of $75,000 and you meet the responsible lending criteria, an unsecured loan could be the best option for you.
However, there are some scenarios where a secured loan could be a better option:
You want to borrow more
There are situations where $75,000 might not be enough, such as major home renovations, or buying a business. If you have an asset you can use as collateral, you could apply for a secured loan, which has a limit of $150,000.
You have bad credit
If you have a bad credit history, this isn’t a deal breaker for us. But you may not be able to get an unsecured loan because of the increased risk to the lender. If your credit score is not so great, a secured loan could make it easier for you to get your loan approved, because your collateral will offset some of the risk.
You want a lower interest rate
In general, secured loans have lower interest rates than unsecured loans. This reflects the lower risk to the lender, enabling them to offer better rates for secured loans.
How to apply for an unsecured personal loan
With Loansmart, applying for an unsecured personal loan couldn’t be easier.
Simply complete our 2-minute online loan application and we’ll be in touch to get some more information.
We’ll then put your application in front of multiple lenders and come back to you with options within 1-2 hours*.
You’ll love how easy it is with Loansmart – we jump through hoops so you don’t have to!
Being an online loan broker enables us to remove all those annoying things like appointments and paperwork, and it allows us to work faster.
All you have to do is apply and then sit back while we do the legwork.
Having access to multiple lenders gives you options, and more lenders means more chances of approval!
Want to find out how easy it is? Apply today!
