Low interest personal loans

Don't pay any more than you have to. Compare a range of personal loans with low interest rates.

By   |   Verified by David Boyd   |   Updated 22 Nov 2023

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Comparing low interest personal loans for over months

Nectar Personal Loan

Nectar Personal Loan

Interest rate

From 11.95% (personalised)

Comparison rate

From 0.00% (personalised)

Repayment period

3 years

Application fee


Monthly repayment


Total repayment



  • Unsecured from $1,000 - $30,000 for Debt Consolidation, Car Loans, Home Improvement Loans, Holiday Loans, Emergency Loans or Wedding Loans.
  • Your personalised interest rate is fixed for the life of the loan.
  • Repayments can be made weekly, fortnightly or monthly depending on your pay cycle with no early repayment penalties.
Harmoney Unsecured Personal Loan (3, 5 or 7 year loan term)

Harmoney Unsecured Personal Loan (3, 5 or 7 year loan term)

Interest rate

From 9.99% (personalised)

Comparison rate

From 0.00% (personalised)

Repayment period

3 years

Application fee


Monthly repayment


Total repayment



  • Rates start from 9.99% — 24.99% p.a. based on your credit assessment.
  • Your rate is fixed for the life of the loan.
  • Flexible repayment options - Weekly, fortnightly, or monthly.
  • No early repayment fee.

Personal loan interest rates can vary significantly. If you compare personal loans, you'll notice that they come with a wide variety of interest rates. In order to keep your loan cost as low as possible, you should look for one with a low interest rate. Although the interest rate is not the only cost factor to consider (because most loans have an application or establishment fee, and may have monthly or annual account-keeping fees and early repayment fees), interest charges do form the major part of your loan cost.

How to qualify for a low interest rate

You won't necessarily be offered the lowest advertised interest rate when you apply for a loan from a particular lender. In fact, you may see interest rates advertised as, for example, '6.95%-16.5%'. To qualify for a loan interest rate at the lower end of that scale you will need to have a credit score in the range good to excellent, and a strong financial record. So check your credit score before you apply, and also request a free copy of your credit history file from one of the national credit agencies.

If your credit score and history are less than perfect, you can still lower your interest rate by opting for a secured personal loan – that is, one backed by collateral in the form of an asset you own, such as your home or car. The lender sees a secured loan as less risky, because they could take possession of your asset and sell it to recover their funds if you default on the loan. Less risky loans usually qualify for lower interest rates.

Main features of a low-interest personal loan

A good low-interest personal loan will have a fixed interest rate (so that you know the low rate will remain low) and a fixed repayment term. The monthly repayment amount will always be the same.

Low-interest loans are usually the most affordable type of loan, because you'll spend less over the loan's lifespan. Your interest rate should be significantly lower than regular credit card interest rates.

Two kinds of low-interest personal loan

Check out these main loan types to make sure that you find the one that's right for you:

  • Secured personal loan: You can usually get a larger loan amount and a better interest rate if you opt for a secured low-interest loan. This is because the loan is secured by collateral, which could be your house or car, lessening the risk for the lender. If you have collateral to support your loan, not only will lenders look favourably at your application but they may also compensate you with a lower interest rate. But you are putting your asset on the line for repossession by the lender if you default on the loan.
  • Unsecured personal loan: Interest rates for unsecured personal loan are usually higher, but if you don't have an asset to offer as collateral, or don't want to risk losing it, you can still find a competitive interest rate by shopping around.

Alternatives to a low-interest personal loan

  • Credit card: A low-interest personal loan is not the only way to finance your purchases at a low cost. Some low-interest credit cards have rates which are very competitive when compared with a low-interest personal loan, and credit card repayments are much more flexible than structured loan repayments.
  • Balance transfer offer: You could also use a credit card to make the major purchase you're intending to finance, and then apply for a new credit card with a 0% balance transfer offer for a period of 6-12 months, sometimes even longer. This type of credit card has the best low interest rate of all – 0% – on your borrowings, but it has a much shorter repayment term before the high revert interest rate kicks in for any remaining balance you haven't been able to repay. So only consider this option if you're confident you can repay in full within the introductory offer period.

Learn about low interest personal loans

Answers to common questions about applying for and using low interest personal loans.

  • FAQs

  • Pros & cons

  • Tips

What fees should I expect?

Exorbitant fees can make a loan more expensive than it first appears. Therefore, before entering into any arrangement, see if your personal loan comes with an application or establishment fee, along with a monthly or annual fee and possibly an early exit or early repayment fee.

What loan terms are available?

Most lenders offer fixed-rate loans with terms ranging from one to five years and variable-rate loans of up to seven years. However, some lenders offer only specific terms within those term lengths, such as one, three, or five-year loans. Verify that you can borrow the amount you need for the time period that suits you. Also be aware that longer loan terms will see you paying more interest in total.

What is an early exit or early repayment fee?

When lenders calculate the interest rate they are prepared to offer, they take into account the loan term and the total amount of interest they will earn. But if your income increases, or you have a cash windfall, or you want to sell the asset on which the loan is secured, you may want to repay your loan early, reducing the lender's profit. This is the reason why some lenders charge an early exit or early repayment fee if you want to repay your loan early or make an extra lump sum payment. These fees can be sizeable, and can make it hardly worthwhile for you to repay early.

So before you take out your loan, it's wise to check if you are actually allowed to make extra or early repayments, and if so, how much it is likely to cost.

Is a low-interest personal loan cheaper than a credit card?

Low-interest personal loans tend to come at a lower interest rate than most credit cards. But there is less of a difference when comparing low-interest loans with low-interest credit cards. So if you're looking for totally flexible repayments, a low-interest credit card could be your best choice.

Are secured personal loans cheaper than unsecured personal loans?

A secured loan is money that you borrow using an asset that you own, usually your home or a car, as collateral. Secured loan interest rates are typically lower, but you're putting your asset on the line for repossession by the lender if you default. So before you sign any paperwork, it's essential that you understand what might happen if you can't make the payments.

Does a lower credit score mean a lower interest rate?

No, it means the opposite. A poor or low credit rating or score could result in you:

  • Paying a higher interest rate
  • Being approved for a lower loan amount
  • Having your loan application rejected altogether

Conversely, a good credit score will mean that you can get a loan at more favourable terms and rates.

Can I refinance a personal loan if there is a lower rate available?

Yes, you can have your personal loan refinanced. Refinancing a personal loan means taking out a new personal loan and making use of the funds to repay the old loan.

The purpose of refinancing any loan is to save money, so a lower interest rate should be a feature of the new loan. You will retain the same amount of debt if you refinance but you will pay less interest per month, making the loan less costly in the long run.

But you will need to check the cost of exiting your old loan. If there are early exit fees to pay, the cost could be high enough to make refinancing not financially worthwhile.

What factors affect the interest rate charged for a personal loan?

Lenders will calculate the interest rate they are prepared to offer based on:

  • Your credit history and score: Higher scores qualify for lower rates.
  • Your income and employment status: Higher incomes and longer-term employees appear less risky to the lender.
  • Your debt to income ratio: A larger gap between your income and debt repayment amounts leaves you with a bigger cushion to cover other expenses.
  • Whether the loan is secured or unsecured: Secured loans are less risky for the lender.
  • The loan term and amount: Higher amounts and longer terms can represent a higher risk for the lender, and longer terms also make it more difficult to predict changes in market rates.
  • The Reserve Bank cash rate: This is usually the base point on which interest rates are set. So although commercial interest rates are higher than the cash rate, they tend to move up and down following changes in the cash rate.

Can I get a personal loan when I have bad credit?

Yes, even if you've got a less than ideal credit score, you can get a personal loan. The loan may have a high interest rate and a limited principal amount, and if your score is really low you'll struggle to be approved by a traditional lender such as a bank. But it's still possible to get a loan from lenders who specialise in bad credit loans, as long as you meet all the other eligibility criteria.

How can I get a loan with a low interest rate?

Look for ways to improve your credit score and opt for a secured loan, choosing a term that's not too long and an amount that will see you able to meet the repayments comfortably from your net income after meeting all other expenses.

Lower cost

Unless your loan is for a very short term or has a very low principal amount, having a low interest rate is going to make a huge difference to the overall cost.

Credit score improvement

Having a low interest rate should make it easier for you to keep up with repayments. And keeping up with repayments will put positive information in your credit history file, leading to an improvement in your credit score, useful for the next time you need to apply for credit.

Better than a credit card

Although interest rates on some personal loans can be similar to, or even higher than, the rates on low-interest credit cards, the interest rate on a low-interest personal loan is still usually better than even the best credit card interest rate.

You may sacrifice other features

By focusing too heavily on the interest rate, you may penalise yourself by choosing a loan which does not have other attractive features, such as low fees, flexible repayments and possible early repayment.

Risking your assets

If you opt for a secured loan in order to qualify for a lower interest rate, you could have the asset you put up as collateral repossessed if you default on the loan.

Temptation to borrow more than necessary

Because the interest rate is low you may be tempted to borrow more than you really need, which defeats the purpose of the low rate because you'll be paying more interest on the higher amount. Only borrow what you need, whatever the interest rate.

Check your credit score before you apply

The better your credit score is, the lower your interest rate is likely to be. You can find out what your credit score is and get a copy of your report, free of charge, from any of the New Zealand credit agencies: Centrix, illion (who also own Credit Simple) and Equifax.

Consider a co-signer

If you don't have a good enough credit score or credit history, adding a co-signer to your application may help you get a lower interest rate. Your co-signer effectively guarantees to repay your loan if you cannot, and is likely to be a relative (e.g. your parent) or very close friend with a good credit history.

Not all lenders accept co-signers, and it's also important for the co-signer to understand that they are taking on a big financial responsibility and could be separately pursued for repaying the full loan amount if you default.

Carefully compare all low-interest loan features

Here's a checklist of features to compare when deciding which loan is best for you:

  • Interest rate. This may seem like a no-brainer, since you're obviously going to check the interest rate if you're looking for a low-interest loan. But if your proposed loan is for a very short period or a very low principal amount, the interest rate may not be the major cost factor. It could be outweighed by set-up fees and ongoing account fees. And while most low-interest loans have a fixed interest rate (which never changes during the loan term), it's still worth checking in case the interest rate is variable (can rise or fall during the loan term), in which case you need to be prepared for the fact that your repayments could increase.
  • Fees payable. Compare loan set-up or application fee (only payable if your application is approved), periodical account-keeping fees, late payment fees and early exit fees (if any).
  • Loan principal amounts available. Many lenders offer between $2,000 and $100,000, depending on your personal financial circumstances, but some lenders may have more restrictive amounts.
  • Loan terms available. You may have a specific term in mind, not offered by every lender.
  • Flexible repayments. It's useful to have the option of being able to make lump sum repayments in addition to your regular repayments, or to be able to pay the loan off early, but not all lenders allow this, or may only allow it in return for the payment of a high fee.
  • Eligibility criteria. Some loans have stricter eligibility requirements than others. Check that you can meet them before you apply.
  • Repayment method. Make sure that the lender offers a periodic repayment method that is convenient for you. The ideal is an automated repayment set-up which debits your bank transaction or savings account, so that you don't have to remember to pay and never miss a payment

In short, make sure you read all the fine print before you commit to a loan.