For many New Zealanders, access to credit is an important part of achieving their life goals - whether it's buying a home, starting a business or dealing with unexpected expenses. However, getting a loan isn't always easy, especially if you're in debt or have a bad credit history.

This article takes a closer look at the main types of loans in New Zealand, common reasons why loans are rejected, and most importantly, how to get a loan when you're in debt, have bad credit, or are facing financial difficulties.

🔹 Part 1: Types of Loans in New Zealand

1. Home Loans (Mortgages)

Home loans are used to purchase or refinance residential property. In New Zealand, most major banks and lenders offer:

Fixed-rate mortgages – the interest rate stays the same for a set period

Floating (variable) rate mortgages – the rate moves with the market

Split mortgages – part fixed, part floating

2. Personal Loans

Personal loans are used for non-property-related needs such as:

Vehicle purchase,Travel,Home improvements,Medical costs,Debt consolidation

They can be:

Secured (backed by a car or asset)

Unsecured (based on creditworthiness)

Loan amounts generally range from NZD $1,000 to $50,000, with repayment terms between 1 to 7 years.

3. Payday and Short-Term Loans

These loans are typically for smaller amounts (up to NZD $2,000) and have high fees and short repayment terms. They’re accessible to people with poor credit but should be used with extreme caution due to the risk of falling into a debt trap.

🔹 Part 2: Why Are Loans Declined in New Zealand?

Loan applications can be declined for several reasons, including:

Poor credit history (missed payments, defaults, or collections)

High debt-to-income ratio

Unstable or low income

Too many recent loan applications

Lack of credit history (common among young people or immigrants)

Previous bankruptcies or insolvency

🔹 Part 3: Can You Still Get a Loan with Bad Credit or Debt? Yes – Here’s How

✅ 1. Check and Understand Your Credit Report

Your credit report is a summary of your borrowing history. In New Zealand, you can request a credit report from:

Centrix,Equifax,Illion

Review it for:

Mistakes or outdated defaults

Unpaid accounts or judgments

Your current credit score (generally out of 1,000)

Understanding your credit profile helps you prepare your application and dispute any errors.

✅ 2. Apply With a Specialist or Non-Bank Lender

Mainstream banks often reject applicants with poor credit or non-standard income. However, New Zealand has non-bank lenders that focus on:

People with past financial issues

Casual or part-time workers

Self-employed borrowers

New migrants without credit history

Examples include:

Finance Now/Avanti Finance/Harmoney/Simplify/Squirrel (peer-to-peer)

These lenders assess affordability, not just credit scores. Approval—even with defaults—if you can prove repayment ability.

✅ 3. Use a Secured Loan

If your credit score is low, consider offering security (such as a car, property equity, or term deposit). This reduces the lender’s risk and increases your chances of approval.

Keep in mind: if you default, the lender can take possession of the secured asset.

✅4. Consolidate Your Debt First

If you’re juggling multiple debts, a debt consolidation loan can combine them into a single repayment—often at a lower interest rate. This:

Simplifies your financial life

Improves cash flow

Can improve your credit score over time

Look for lenders who specialise in debt consolidation and consider including this in your application strategy.

✅ 5. Work With a Financial Adviser or Loan Broker

Loan brokers understand different lenders’ requirements and can match you with those more likely to approve your application. Some specialise in:

Bad credit loans

Self-employed or gig workers

Bankruptcy recovery

In New Zealand, advisers are required to act in your best interest and are regulated by the Financial Markets Authority (FMA).

🔹 Part 4: Tips to Improve Loan Success Rate

Be honest in your application – Lenders can verify your income, employment, and existing debts through bank statements.

Avoid applying with multiple lenders at once – This can negatively affect your credit score.

Create a written budget – Showing financial responsibility can help win trust, even if your history isn’t perfect.

Wait at least 3–6 months between declined applications before reapplying.

✅ Conclusion: Bad Credit Isn’t the End of the Road

Getting approved for a loan in New Zealand can feel impossible if you’ve been rejected before or have a poor credit score. But options do exist. Whether it’s applying through a specialist lender, offering security, or starting small to rebuild your credit—there are legal, ethical ways to get the funding you need.