Firstly, what are Personal Loans?
A personal loan gives you a lump sum of money upfront, which you repay over a set period with regular, fixed repayments: weekly, fortnightly or monthly. You can use it for just about anything, from a new couch or car repairs to bringing a few debts together.
At Instant Finance, you can borrow from $500 to $50,000 over 3 months to 7 years, with interest rates from 9.95% to 29.95% p.a. depending on your circumstances.
Learn more about how to apply for a personal loan.
Pros of Personal Loans
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Lump Sum: Personal loans provide a lump sum of money upfront, which can be useful for large expenses or debt consolidation. Use our personal loan calculator to estimate your monthly payments.
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Fixed Payments: Your interest rate is fixed for the life of the loan, so your repayments stay the same and are easy to budget for.
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Flexibility: You can use the funds for almost any purpose, from home improvements to medical bills.
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Spend it anywhere:The money goes into your bank account, so you're not limited to stores that offer a particular payment option.
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Bigger amounts, more time:You can borrow more and take longer to pay it back than with most BNPL plans.
Cons of Personal Loans
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Interest and Fees: You'll pay interest from the start, plus fees such as a one-off establishment fee and a small fee per repayment, so it's worth looking at the total cost, not just the weekly amount. You'll find all our fees on our rates and fees page.
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Credit Impact: Your credit score affects your eligibility and interest rates and taking out a loan can impact your credit score. Learn more about how personal loans affect your credit score.
What Is Buy Now, Pay Later (BNPL)?
BNPL is a type of short-term financing that allows consumers to make purchases and pay for them over time, often with no interest if payments are made on time.
BNPL services, such as Afterpay, Zip and Laybuy, are typically offered at the point of sale, both online and in-store.
Since 2 September 2024, buy now pay later in New Zealand has been covered by consumer credit law, which means providers must run a credit check when you sign up as a new customer.
Pros of BNPL
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No Interest (Often): Most BNPL plans are interest-free if you pay each instalment on time.
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Convenience: BNPL is good for smaller, individual purchases and is often integrated directly into the checkout process of online retailers.
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Quick to pay off: Most plans are cleared in about six weeks, so smaller purchases don't hang around.
Cons of BNPL
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Short-Term: BNPL is generally for smaller, short-term purchases, and the repayment period is usually shorter.
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Late Fees: Miss a payment and you'll usually be charged a late fee.
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Plans can stack up: It's easy to have a few plans running at once across different stores, each with its own due dates.
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Participating stores only: You can only use it where the store offers your BNPL provider.
Key Differences Between Personal Loans and BNPL
Here's how they compare, along with credit cards. For more on cards, see our credit card vs personal loan guide.
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Buy Now Pay Later
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Personal Loan
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Credit Card
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What it costs
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Interest-free if you pay on time
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Fixed interest (9.95%–29.95% p.a. with us) plus fees
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Interest on any balance you don't pay off by the due date
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How much
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Smaller amounts, with limits set by the provider
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$500 to $50,000 with us
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Up to your credit limit
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How long to pay
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Usually about six weeks
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3 months to 7 years
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No set end date. You pay at least the minimum each month
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Where you can use it
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Participating stores
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Anywhere. The money goes into your account
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Anywhere cards are accepted
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Credit Check
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Yes
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Yes
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Yes
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Good to Know
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Late fees apply if you miss a payment
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Repayments stay the same for the whole loan
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Paying only the minimum keeps the balance around for longer
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When to Use Each
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Personal Loans: Best for bigger purchases, bringing debts together, or when you'd like more time to pay with regular repayments that don't change. After a smaller amount? Our cash loans page explains how those work.
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BNPL: Ideal for smaller, one-off purchases, especially if you can pay off the balance quickly. BNPL is also a good option for those who want to avoid interest charges and prefer a more flexible, short-term payment plan.
A worked example: a $3,000 lounge suite
Say you've found a $3,000 lounge suite.
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With buy now pay later (where the store offers it and your limit covers it), you'd usually pay four instalments of $750 over about six weeks, interest-free if each one's on time.
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With a personal loan over 12 months at 19.95% p.a., you'd pay $71.59 a week, or $3,722.68 in total, including interest and fees.
You'd pay more overall with the loan, but in much smaller amounts over a longer time. So it comes down to what fits your budget.
Try your own numbers in our loan calculator, and our affordability tips can help you work out what's comfortable.
