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Compare the Best Online Loans - September 2023

Online loans are a fast option for borrowing money; how much you pay depends on the interest rate, upfront fees and ongoing charges. Our guide compares lenders and helps outlines the pros and cons of online loans.
Updated 15 November 2023

Important: Please do not rush reading this guide. We know a fast online loan is your focus right now; this guide contains many options that can help you while minimising or eliminating repayment. We have put it together carefully for your benefit. Spending 5-10 minutes reading will help you make a financially sensible decision.

Know This First: Online loans are, for the most part, aimed at New Zealanders who may struggle with regular credit card repayments and/or keeping up with other loans. We believe the worst thing than an unaffordable loan is another loan - there are hundreds of debt counsellors and budget advisors all around New Zealand who help anyone with debt troubles - our guide to debt help has more details. 

Top tip: We strongly suggest contacting Work and Income to see if you qualify for Hardship Assistance (to cover urgent costs and living expense assistance). This support is available to any New Zealand citizen or resident who needs urgent money.

Online Loans - Our View

Online lenders focus on speed and convenience, but it can come at a higher price than other options. Before you take out a loan, you'll be shown the interest rate you're being offered, as well as the associated upfront and ongoing fees. They have pros and cons, and are not the only form of loan available. To protect you from unaffordable debts, our guide covers:
Advertising disclaimer: In the interests of full disclosure, MoneyHub may earn a referral bonus for anyone that’s approved through some of the below links. We publish the best publicly available online loan offers that we can find, irrespective of any pre-existing commercial arrangement.

Online Loans vs. Payday Loans

Payday loans are, arguably, the worst types of finance available. Our guide lists the least bad options, with most payday loans starting at around $155 to $500. Payday lenders often put their interests (money) over those of their customers (affordability and dignity) and charge exorbitant interest rates and fees for late payments. If you fail to repay, there are additional penalties, and the lender may have the ability to take money directly from your bank account. This can leave you without any money in your account and/or a bigger (and more expensive) overdraft. 

How much can I borrow with an Online Loan?

Online loans usually begin at around $1,000 and go as high as $50,000 (or more in some cases). The predatory high-interest online loan providers advertise smaller loans, with $250 or $500+ being the standard. In many cases, borrowers looking for small loans (i.e. less than $1,000) will pay a higher interest rate than those looking for $10,000+ given the perception of risk and affordability.

Video Explainer
MoneyHub's Head of Research, Christopher Walsh, explains how online loans work, specific risks, pros and cons and must-know facts and considerations:

Online Loans - Pros and Cons

While features will vary between lenders, online loans are usually similar and have consistent pros and cons, as we outline:

Pros:
  • Convenience: You don't need to meet with a lender or apply over the phone, nor do you need to complete an application in person. Online loans are, understatedly, as the name suggests, 100% online. 
  • Fast interest rate estimate: You'll be given an interest rate promptly, with no need to wait for more than a few minutes for a lending decision. Banks and credit unions traditionally can't offer such speed and sometimes add to your customer records the fact that you've applied for a loan even if you don't accept the offer. Online lenders let you anonymously see the offer without requiring your details.
  • Online lenders can make a complete assessment: Unlike traditional lenders, online lenders are powered by data that is often more thorough. This means that if you have a good credit history, low debts and earn a comfortable amount, you'll be offered the best interest rate. If you've struggled with debts, have a lot of existing repayments and have a low income, online lenders will provide a higher interest rate (if they accept your application).
  • It's easy to compare online loans: Because online pre-qualification takes only a few minutes, you can gather quotes without the need to make numerous applications.
  • Debt assistance: Some online lenders allow borrowers to consolidate debt with their loan. This means that debt becomes more affordable overall (if the interest rate and fees are lower) and easier to manage with fewer direct debits or repayments falling due. 

Cons:
  • Some Online Loans can be more expensive than credit unions and some banks: Credit Unions typically get to know their customers face-to-face, which can mean lower interest rates as they exclude borrowers who don't meet their strict criteria. 
  • Loans range in size, and small-sized loans can be punishingly expensive: Typically, the smaller the loan, the higher the interest rate. This is because people who need to borrow $2,000 are usually much higher risk than someone who has the means to borrow $20,000.
  • Online Loans attract predator lenders: There are some trusted and affordable online-based lenders, and there are some payday-type lenders who join the space. New Zealand law has helped reduce the predatory practices and now caps interest rate and fees at 200% of the original loan. This means if you borrowed $2,000, the most you will have to pay back is $4,000. However, paying 200% is still far too much when there are always more affordable options. 

Know This: Predatory lenders usually advertise that they don't look at credit, and even if this is true, you pay very high interest rates. Before agreeing to any loan, make sure you know the interest rate, fees and repayment schedule so you know how much the loan will cost. ​

Are there alternatives to taking out an Online Loan?

Yes - we outline four alternatives here.

Current Online Loan Offers:

We list the most prominent online lenders below. Please note we have excluded lenders that specialise in offline and branch-level loans rather than online loans. We have also excluded all Payday lenders.
Lending Crowd
  • Interest rate: From 8.95% p.a.
  • Establishment or Loan Fee: $250 to $1,450 depending on the loan 
  • PPSR (security registration fee): Free of charge
  • Early repayment fee? No - free of charge
  • Other fees: Standard late payment fees etc (see website)
  • More details: Visit Lending Crowd
Harmoney
  • Interest rate: From 9.99% p.a.
  • Establishment or Loan Fee: $150
  • PPSR (security registration fee): None
  • Early repayment fee? None
  • ​Other fees: Overdue fees, which is $20 on each of 6, 36, 66, 96, 120 days after the payment date
  • More details: Visit Harmoney
Nectar
  • Interest rate: Between 11.95% p.a - 29.95% p.a.
  • Establishment or Loan Fee: $240
  • Loan Amount: $2,000 - $30,000
  • Term: 6 months to 5 years
  • PPSR (security registration fee): Free of charge
  • Early repayment fee? No - free of charge
  • Other fees: Fee schedule
  • More details: Visit Nectar
GEM
  • Interest rate: Between 10.99% to 25.99% p.a.
  • Establishment or Loan Fee: $240 
  • PPSR (security registration fee): No
  • Early repayment fee? Free of charge
  • Other fees and more details: Visit GEM Finance

Four Alternatives to Online Loans (and What to Watch Out For)

You don't need to rush into taking out a Online Loan - there are many alternatives, and we explain them below in detail:

​Credit unions (a low risk, low cost option)

New Zealand has many credit unions – First Credit Union is one example. Credit unions charge lower interest rates than many online lenders and may be able to help. They can also offer repayment plans and more flexible loans and can discuss your situation in detail to help provide an affordable loan.

Read our reviews here: First Credit Union

​Talk to your bank (a low risk, low cost option)

Banks have some responsibility to help anyone who needs financial help. If you owe money on credit cards or personal loans, ask about a hardship application. A hardship application asks your bank to help you work out a more flexible repayment plan.

Consider a credit card (a low risk, medium cost option)

If you already have a credit card and you have still not maxed it out, credit card debt is very likely to be cheaper than taking out a new loan. You’ll have to meet the minimum repayments (find out what your bank charges here) – it will either be 2%, 3% or 5% of the balance each month).

More details: Visit our low-interest credit cards comparison.

Free and discounted loan providers for low-income New Zealanders

There are a number of incredibly helpful community lenders who offer fee-free or low-interest loans to anyone with a low-income. We list these below:

1. Good Shepherd New Zealand is a non-government, not for profit organisation, working in partnership with the BNZ, Kiwibank and three community providers - Aviva Families, The Salvation Army, and Vaka Tautua. It offers fee-free loans to people with limited incomes; schemes include no-interest loans and the Good Loans (with an interest rate of 6.99% p.a.). 
Website:  www.goodshepherd.org.nz. 
Available: Nationwide 

2. The Nga Tangata Microfinance Trust offers Asset Building and Debt Relief loans to help ease the burden of excessive debt. The debt relief loans are to a maximum of $3,000, with capital provided by KiwiBank. The applicant must pay back the loan in full within two years, and they must have been working with a budget advisor for at least six months.
Website: www.ngatangatamicrofinance.org.nz
Location: Nationwide ​​
Brochure: Download here

Conclusion: Online Loans

  • Online loans are either affordable (with lenders such as Lending Crowd offering finance from 7.95% p.a.) or expensive (with many lenders going as high as 29.95% p.a., plus penalties, fees and missed payment interest hikes.
  • The reality is simple - most online loans have interest rates close to what you'll pay on a credit card (20%+) given the risks involved. Comparing your options by getting a number of no-obligation quotes is the best way to make sure you're not overpaying. Borrowing is expensive, but online loans are, for the most part, transparent in their pricing.
  • Difficulties arise when you fail to repay - online lenders will charge penalties and this can get costly. If you already have a debt problem, we strongly suggest seeking the assistance of a budget advisor who can help restore your credit history by assisting you with money management. For more information, visit MoneyTalks, Sorted.org.nz and the NZ Government.
  • An online loan is unlikely to solve an existing debt issue, and arguably, it may make your situation worse.
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