Bank vs Non-Bank Lending

The best personal loan for you will vary depending on your individual financial situation, credit score, and the specific terms and conditions that you’re looking for. And several factors influence what makes a personal loan “the best” for you, including interest rates, loan amounts, repayment terms, and the lender’s reputation. Canstar explores the best personal loans currently on offer.

Banks vs non-bank lenders

When considering personal loans, you have the option of obtaining them from traditional banks or non-bank lenders. Each option has advantages and disadvantages, and the choice that’s best for you depends on your individual financial situation and needs.

Bank personal loans

There are many reasons why taking out a personal with a bank may be the best option for you. These include:

• Regulation and stability – banks are heavily regulated financial institutions, which can provide a sense of security for borrowers. They are subject to strict lending and consumer protection laws
• Established reputation – banks have a long history and established reputations, which can make borrowers more comfortable
• Branch accessibility – you can visit a local branch for in-person assistance and applications
• Relationship banking – if you already have an account with a bank, they may offer you more favorable terms due to your existing relationship

Non-bank personal loans

Taking out a personal loan from a non-bank lender can have several advantages, depending on your financial situation and needs. Here are some reasons why you might consider a personal loan from a non-bank lender:

• Faster approval – non-bank lenders often offer quicker approval and disbursement of funds, which can be crucial in emergencies
• Flexible qualification criteria – non-bank lenders may be more lenient with credit requirements, making it easier for individuals with less-than-perfect credit to obtain a loan
• Online convenience – many non-bank lenders operate primarily online, which can be more convenient for tech-savvy borrowers
• Specialised loan products – non-bank lenders may offer specialized loan products for specific needs, such as peer-to-peer loans, debt consolidation loans, or payday loans

Canstar’s 5-Star Outstanding Value Personal loans

If you’re looking for a great value personal loan, Canstar can help. Each year Canstar’s expert research team rates and compares the major personal loan lenders in the market. For this year’s research, our team analysed over 50 loans from 12 providers:

• Car Loans – 35 rated
• Personal Loans – 19 rated

On the findings of the research, the best lenders are awarded our 5-Star Outstanding Value rating. This year, three lenders take out our top awards, across the two loan categories:

• Harmoney NZ
• The Co-operative Bank
• Westpac

5-Star Outstanding Value Personal Loans

Lender	Loan | Credit Range
	Unsecured Personal Loan | A1-A5
	Unsecured Personal Loan | A++ to A

5-Star Outstanding Value Car Loans

Lender	Loan | Credit Range
	Secured Car Loan | A1-A5
	Unsecured Personal Loan | A++ to A
	Electric Vehicle Loan | n/a

Overview of Harmoney’s loans:

• Long-term personal loans from $2000 to $70,000, for either three or five years
• Secured fixed rates from 9.89% p.a to 21.49% p.a. depending on the borrower’s individual credit rating
• Unsecured fixed rates from 9.99% p.a. to 24.99% p.a. depending on the borrower’s individual credit rating
• Harmoney has a one-off establishment fee of $150. The establishment fee is added to your approved loan amount and repaid on settlement of the loan
• There are no fees for early repayment

Overview of The Co-operative Bank’s loans:

• Unsecured personal loans from $3000 to $50,000, from six months to five years
• Loans over $50,000 also available
• Repayments either weekly, fortnightly or monthly
• Interest rates from 8.99% to 17.75% p.a. depending on the borrower’s individual credit rating
• $155 application fee applies

Overview of Westpac’s loans:

• Unsecured personal loans of up to $50,000, from six months to five years
• Westpac’s special EV Loan rate is 7.99% (for use towards purchasing a new or used electric/hybrid car, e-moped or e-bike
• Westpac’s standard interest rate for all other personal loans is 13.9% p.a.
• No establishment fee
• Change your repayment amount, or pay it off early, with no additional charges or fees in internet banking

For more information, and to compare all the loan providers and products in Canstar’s extensive database, just hit the button below.

Compare personal loan providers for free with Canstar!

About the author of this page

This report was written by Canstar Content Producer, Caitlin Bingham. Caitlin is an experienced writer whose passion for creativity led her to study communication and journalism. She began her career freelancing as a content writer, before joining the Canstar team.