What is a secured loan and how does it work in NZ?
A secured loan is a personal loan where you offer an asset as collateral against the debt. Because the lender has something to recover if repayments are not met, secured loans typically come with lower interest rates and access to larger loan amounts than unsecured lending of the same value.
In New Zealand the most common assets used as security for personal loans are vehicles, boats and other registered assets. The lender registers a security interest in the asset on the Personal Property Securities Register (PPSR). This does not mean the lender takes possession of the asset. You keep and use it as normal. It does mean they have a legal claim over it if you default on the loan, and that registration is removed once the loan is repaid in full.
Secured vs unsecured loans in NZ. Which is right for you?
The key difference between a secured and unsecured loan is whether you offer an asset as collateral. Both are available through Payday Advance NZ. Which is right for you depends on your loan purpose, the amount you need to borrow and whether you have a suitable asset to offer.
When a secured loan makes sense
A secured loan makes sense when you need to borrow a larger amount, want access to a lower interest rate or have an asset available that meets the lender's criteria. If you are financing a vehicle or a boat the asset you are purchasing is often used as the security for the loan itself. Secured loans also suit borrowers whose credit profile may not qualify for the best unsecured rates but who have a valuable asset to offer.
When an unsecured loan may be better
An unsecured loan makes sense for smaller amounts, situations where you do not have a suitable asset to offer or where you prefer not to put an asset at risk. While unsecured loans typically carry a higher rate they are faster to arrange and have fewer conditions attached.
Not sure whether to go secured or unsecured? Apply once and our team will help you work out the right option for your situation. We present both options where available so you can make an informed decision before committing.
What assets can be used as security in NZ?
The most common assets accepted as security by lenders on our panel are registered vehicles including cars, trucks and vans, boats and watercraft, and in some cases business equipment or machinery. The asset generally needs to be owned outright or near-outright. If there is existing finance on a vehicle the lender who holds the current security has first claim, which typically prevents it from being used as security for a new loan.
The value, age and condition of the asset will be assessed by the lender as part of the application process. A newer asset with a clear market value is easier for a lender to assess and typically results in better terms. Older assets or those in poor condition may attract fewer lender options or require a higher deposit.
Understanding the PPSR and what it means for your loan
The Personal Property Securities Register (PPSR) is a government-administered register of security interests in personal property in New Zealand. When a lender takes security over an asset they register their interest on the PPSR. This creates a public record that the asset is subject to a security interest.
For borrowers this means a few practical things. If you want to sell the asset while the loan is active you need to either repay the loan or have the buyer assume the debt. Otherwise the security interest follows the asset to the new owner. Running a PPSR search on a vehicle or asset you are thinking of purchasing is always advisable. It reveals any existing security interests that could affect your ownership.
If you take out a secured loan and are unable to meet repayments the lender may repossess the asset. Always make sure repayments are affordable before proceeding. Our team will walk you through the full repayment schedule and total cost of the loan before anything is finalised.
How to apply for a secured loan through Payday Advance NZ
Applying takes about 5 minutes. You will need your NZ driver licence or passport, three months of bank statements, details of the asset you are offering as security and details of any existing loans or debts. If you are financing a vehicle or vessel the details of the asset you plan to purchase will also be needed.
We run a soft credit check during our assessment which does not affect your score. We then match you to the lender on our panel most suited to your situation and contact you with your options. Our team will explain everything clearly before anything is finalised. Rate, fees, term and what happens to your asset in various scenarios.
Payday Advance NZ is operated by the same team behind Lending Room. One of New Zealand's most trusted loan brokers with over 1,060 reviews on Trustpilot. The same lender panel, the same service standards and the same commitment to finding you the best deal.