So how can you get a loan once you’ve hit the bad credit blip? We’ve rounded up all you need to know about bad credit loans in New Zealand, including bad credit loans for beneficiaries and bad credit loans with guaranteed approval. You can find comparisons for all the key lenders below.

If you’re needing money fast and have nowhere else to turn, a loan can be a great way of dealing with large or sudden expenses. Perhaps you’re wanting to make a big-ticket purchase, pay for a major event like your wedding or a tangi, or tide your family over until the next pay day after an unexpected bill. Whatever the reason, being turned down because of credit issues in your past can be a real blow.

Fortunately a number of lenders will help you out despite your poor credit rating. It pays to proceed with caution though – sometimes such lenders fall into the ‘payday loan’ category, and their cash can come hand-in-hand with extremely high fees and interest rates, and the very real risk of being trapped in a debt cycle.

Bad Credit Loans in NZ

What exactly is a ‘bad credit loan’? In New Zealand this is not a specific loan category, but you’ll find there are plenty of lenders who will market themselves as offering ‘bad credit loans’ to people with less-than-perfect credit histories.

It’s very difficult to get a loan from a New Zealand bank if you have bad credit. What exactly defines ‘bad credit’? Well, that’s highly dependent on your circumstances and the policies of each individual lender.

Don’t know what your credit history looks like, or why you’re being turned down by traditional lenders? It’s your legal right to request a free copy of your credit history. In New Zealand there are three credit reporting agencies that hold individuals’ credit histories, and you’ll need to apply to each one to see what information they hold about you. 

The Citizens Advice Bureau has a handy page of information about how to apply for your credit history from these agencies. Before you start seeking a loan provider that will work with your ‘bad credit history’ it might pay to see for yourself exactly what that history entails. 

NZ Bad Credit Loans - Guaranteed Approval

In the world of reputable lenders there’s no such thing as a guaranteed approval bad credit loan. If you’ve been offered one, it’s very likely a scam and you should proceed with extreme caution. Those promising such an easy path to a loan will often sting you with sky-high interest rates and fees. 

If in doubt about a lender’s credibility, check with the Financial Markets Authority (FMA) and see if they are listed on the Financial Service Providers Register. If they aren’t, cease contact with that lender and call the FMA to let them know. 

How to Get Bad Credit Loans

A number of New Zealand lenders offer loans to people with bad credit. Many of these fall into the ‘pay-day lender’ category. This means the lenders are likely to be less strict about application requirements like credit history, and more expensive when it comes to interest rates, fees, repayment penalties, and loan changes.

There are also plenty of opportunities for beneficiaries to get bad credit loans. If you are a beneficiary needing a bad credit loan, shop around and find a lender who is willing to help despite your income barrier. The same goes for those in part-time work - a part-time worker bad credit loan may be easier to secure than you think.

You can read more about NZ payday lenders over on our payday lender page.

The best starting point for making a loan application is talking to your bank. Make an appointment, sit down with a personal banker, explain your situation, and see what they can do for you. The answer may ultimately be ‘no’, but there is zero shame in trying and a lot to gain if you can in fact get money through your bank rather than via a payday lender.

Peer-to-peer platforms are another way of getting money when you need it most. Peer-to-peer lenders are essentially just New Zealanders like you, investing money in a lending platform that hands out personal loans. For those of us borrowing it’s a way of achieving low interest rates, and for investors it means a higher rate of return than many other types of investment.

If you aren’t able to secure a loan via these channels thanks to your credit history, then a payday lender may be your only option for a bad credit loan. Be warned, though. Payday loans are not recommended to those already in debt or struggling to get by. With extortionate interest rates and high penalties for late payments, they’ve been known to trap people into years of unmanageable debt.

What to Look for When Comparing NZ Bad Credit Loans

Just because you’ve got a bad credit rating doesn’t mean you shouldn’t shop around when seeking a bad credit loan in New Zealand.

As with any type of credit, comparing bad credit loans is a must in order to get a good deal and to save you money in the short and long term. But what should you look for when reading the comparisons at the top of this page? We’ve rounded up the top seven things to help you keep focused on what’s most important:

1)      Which Bad Credit Loan has the Lowest Interest Rate?

Bad credit loans are less a ‘type’ of loan in themselves, and more a policy of lenders. As such, comparing bad credit loan interest rates means first identifying which lenders will be open to your poor credit history.

If you’re able to convince your bank to give you a personal loan – well done! Personal loan interest rates range anywhere from 11 to 22% pa. 

But if you have to sign up with a payday lender thanks to your credit history, you could be looking at anywhere from a 100 to 600% interest rate. This is why it’s so important to compare bad credit loan interest rates before signing up to a lender. With a 600% interest rate, a $500 loan could be a $3000 burden on your shoulders within a year. Ouch!

2)      Which Bad Credit Loan is Least Likely to Trap you in a Debt Cycle?

The debt cycle is unfortunately something than many lower income New Zealanders have experienced. Debt traps are vicious, and with the high cost of living in New Zealand, they’re an issue getting more and more coverage in the media.

One such case making headlines comes from a woman who, as a 19-year-old in 2009, took out a loan to pay for a computer and printer. Although her original loan was only for $1000, by 2019 she still owed $1833 to debt collectors, even though she’d already paid $4000 on the original $1000 loan.

Horror stories like hers serve as a warning to all who consider payday lenders as the source of their bad credit loans. When comparing lenders, do your utmost to find one that will only lend you what you can afford, who will work out a manageable payment plan for you, and whose fees and interest rates won’t have you trapped in a debt cycle for years and years into the future.

If you’re feeling overwhelmed by your loan and don’t know what to do, try getting in touch with an advisor from the Citizen’s Advice Bureau – they may be able to help you see another way through the rough patch.

3)      Which Payday Loan has the Least or Lowest Fees?

Even if the interest rate on your bad credit loan seems low enough, you should also compare the fees charged by each lender.

Often with payday and other similar lenders, fees can be high and frequent. You can find yourself paying every time you take out a new loan, make an extension to your existing loan, make a late repayment, or even if you cancel your direct debit. If money is already tight, these fees can add extra pressure and make your weekly or monthly repayments even more of a challenge.

Before you sign up with any lender, make sure you calculate how much you’ll need to pay in fees, and be honest with yourself about whether you can manage those extra expenses.

4)      What is the term of the loan?

It’s always a good idea to think about how long you want to – and  how long you can – take your bad credit loan out for.

Obviously one of the biggest goals with any loan is to find that sweet spot between manageable repayments and paying too much in interest.

If you go with a payday lender who charges you 600% interest every year, and you choose a one year loan term, then over the next twelve months you’ll end up paying $6000 in interest. All because you borrowed $1000!

Don’t underestimate the importance of your loan term when comparing lenders and making a decision on your loan provider.

5)      Turnaround time

If you need money NOW and time is of the essence, finding out about your chosen lender’s turnaround time should be paramount. If this is you, you’ll want to find a loan provider that offers a speedy application process and a fast payout. Many payday lenders will be able to get the money to you within one day, but never assume this is the case – always check the small print or give them a call to ask.

6)      Which Bad Credit Loan is Most Sympathetic to Late Payments?

You’ve got yourself a bad credit loan and now you’re struggling to make repayments again. Sometimes finances can be tough like that – but you need to try and set yourself up in case you experience such a fall. If you sign on with a lender that takes an extreme approach to late repayments, you could find penalty fees piling up around your ears. A more flexible, compassionate lender can mean the world when things go wrong, and can save you years of spiraling debt.

7)      What will my total repayments be with this lender?

Last but not least, compare the total repayments you’ll need to make with each of the lenders you’re interested in.

Even if the interest rates seem low with one lender, fees may make it the more expensive option. It pays to jot up all the figures associated with the loan, and ask lenders what your total repayments would be. If it starts to mount up, maybe it’s not such a great deal after all.

What Alternatives Are There to Bad Credit Loans in New Zealand?

If you need a loan, the safest bet is your current bank. As a reputable lender, they’ll only lend you what you can afford. Their interest rates are pretty attractive too. Obviously the key issue here is that many banks refuse to lend to those with bad credit. Still, chatting to your bank is still the best option as a first port of call. If they won’t give you a loan, see if they’ll offer you a small overdraft, a credit card, or extend an existing overdraft or credit card. 

A credit union is another type of reputable lender to get in touch with. Just be upfront about your credit history concerns and see if they can help you. 

If you’re needing money to cover an upcoming bill, you can try asking your service provider for a payment plan, rather than paying the bill in full.

If you’d prefer, asking a friend or family member for a small loan could be a much cheaper path than a bad credit payday loan. It’s best to agree the terms of the loan in writing, so everybody knows when it will be paid back. 


Bad credit can be a real bummer, but by comparing your options carefully, you can get a bad credit loan that sees you through until finances bounce back again. 

While payday lenders often seem like your friend when it comes to your bad credit history, it’s definitely worth shopping around before signing any contracts. If your bank will help you out, a loan with them is likely to be far and away more affordable than one through a payday lender.  


Do Bad Credit Loan Lenders Actually Do Credit Checks?

Sometimes yes, sometimes no. For some people, one of the main attractions of payday loans is the fact they’ll overlook (or not even check for) a bad credit score.

Can Beneficiaries Get Bad Credit Loans in New Zealand?

Again, it depends. A lot of lenders refuse to lend to beneficiaries because they demand that a certain percentage of repayment money does not come from government sources.

Can I Get a Bad Credit Loan if I Work Part Time?

This depends on the lender. Most bad credit payday loan lenders have a minimum income threshold. Others may refuse you if you are not in permanent, full-time employment.

Do I Need to Give a Reason for Wanting a Bad Credit Loan?

Most bad credit payday loan lenders don’t require you to give a reason for your loan application.                              

How Soon Can I Get Money with a New Zealand Bad Credit Loan?

Many lenders offer very fast turnarounds on payday loans. Some can get the money to your account less than 24 hours after you have submitted your application.

What if I Can’t Repay My Bad Credit Loan?

If you’re experiencing financial hardship and don’t feel that you can make your repayments, first try speaking with your bad credit loan lender to see if there is any way you can work out a payment plan that relieves the financial squeeze. A warning though – payday lenders have strict rules around repayments and are unlikely to budge, even if you find yourself in a bad situation.

If you are struggling and would like free financial counselling, you can call 0800 345 123, the MoneyTalks helpline operated by FinCap.