How to Choose The Right Car Loan in NZ

Choosing the right car loan lender in NZ.

What’s Covered in this Article?

What is a Car Loan?

A car loan is a lump sum of money that a borrower receives from a lender for the express purpose of purchasing a vehicle. Generally, the vehicle acts as security against the loan. The money is paid back to the lender over an agreed time (usually around 3 years), with interest.

The Benefits of Taking Out a Car Loan NZ

While car loans might not fit everyone’s needs, they can help many types of consumers in various ways.

  • There are a lot of lenders to choose from. Because of this, it is easy to find a lender for a car loan.
  • A buyer can drive off the lot immediately. Borrowers do not have to wait until they’ve saved up enough personal capital before taking their new cars home. As soon as they’ve signed for the loan, they can drive their new vehicle off the lot and pay for it over time.
  • The car doesn’t remain in the lender’s claim forever. Once the loan is paid off, the car is owned outright by the borrower.

The Risks of Taking Out a Car Loan

It’s important to know the risks ahead of time to better understand the requirements for a car loan. These risks could determine if a car loan is really the best option.

  • Interest rates can be high. High interest payments mean the borrower will end up paying a lot more than the original price for the car over time.
  • Car loans may require a co-signer. A co-signer is required when the borrower’s credit does not meet the minimum requirements.
  • The vehicle will be used as collateral against the loan. If a borrower defaults on the loan, the car can be used as collateral, and the lender can seize the vehicle as a form of payment.

5 of the Best Car Loans NZ

If you’re ready to get a car loan, we’ve researched the following options. Otherwise read on!

1. Simplify

Simplify is an online company that acts as a middle man for borrowers looking for the best car loans. They compare and negotiate with different lenders to find the best rates. Simplify also offer negotiating services for borrowers, so that there is no pressure to haggle for the best deal.

Interest rates and fees: Interest rates vary from 7.5% up to 14.5%. Additional charges include an establishment fee of $276, a $500 referral fee, and a $10 registration fee.

Requirements: To apply for a loan, applicants must be at least 18 years old, be citizens or permanent residents of New Zealand, and make at least $500 per month.

How to apply: Fill out the quick quote form to get started with the application process with Simplify. An email containing the final quote will be sent out, and borrowers can choose to continue the process from there.

2. MTF Finance

MTF Finance have over 50 physical offices spread throughout New Zealand, meaning you can talk face to face with a specialist in your local area. They offer both secured and unsecured personal loans for any purpose and pride themselves on a more traditional person to person approach. Online and phone based applications are also offered.

Interest rates and fees: For loans secured against an asset, such as a vehicle, interest rates range from 11.35% to 23.35% per year. Unsecured loans range from 13.85% to 23.85% per year. Both types are fixed for the term of the loan. MTF Finance have a loan establishment fee of up to $376, monthly fee up to $8.50 and PPSR of $10.35

Requirements: To apply, applicants must be over 18 years old, have a valid NZ driver license and have a regular income.

How to apply: You can apply online, over the phone or in person at over 50 branches spread throughout NZ.

3. Nectar

Nectar provides online unsecured personal loans from $2,000 – $30,000. Using Nectar’s 100% online process you can receive your personalised loan quote including your interest rate, borrowing ceiling and repayment options in 7 minutes. Furthermore, you can have the cash you need on the same day as your application. Nectar offers loans that are faster than a bank, cheaper than credit cards and easier than finance companies. Being 100% online means their costs are often cheaper than traditional lenders.

Interest rates and fees: Nectar provide loans at rates from 11.95% to 29.95% and charge an establishment fee of $240 and a monthly fee of $1.75.

Requirements: Borrowers must comply with the following – Aged 18 years or over. Be a NZ citizen or permanent resident. Hold a NZ drivers license or NZ passport. Have a NZ bank account. Earn an income of $350 per week (after tax) or greater. Not be self-employed. Not have any significant unpaid defaults or previous bankruptcies.

How to apply: Apply online and receive a quotation straight away.

4. Finly

Finly is a broker with a panel of lenders who will take your details and find you the best deal. The application is online or over the phone and they can have your application formally approved within an hour and have you driving your car the same day. Finly can also help you find your preferred vehicle, they partner with a range of new and used trusted dealers across New Zealand. You can borrow 100% of the car value and Finly can also help with insurance.

Interest rates and fees: From 8.25% to 22.95% with a $205 establishment fee, with a monthly fee of $9.85 which includes the PPSR fee.

Requirements: In order to get financing from Finly, you must be over 18, a New Zealand citizen or an acceptable visa holder, and have a permanent address.

How to apply: Complete and submit your details through the enquiry form. You will receive a call within 2 business hours from an experienced consultant to discuss your quote and available loan options. All applications are obligation free.

5. Harmoney

Harmoney is an online lending institution that offers unsecured car loans, meaning there is no requirement to have collateral attached to the loan. Furthermore, they don’t penalize borrowers for early repayment. The rate borrowers get during the loan process is fixed, so it will not fluctuate for the life of the loan.

Interest rates and fees: From 6.99% to 24.69%. Establishment fees also range from $200 to $450, depending on the loan.

Requirements: To be approved for car loans in NZ through Harmoney. Applicants must be at least 18 years old, be New Zealand citizens or permanent residents, and have a stable income.

How to apply: Select the ‘Apply Now’ button on the site and begin an application using Facebook, Google, or an email address.

If you still want to find out more about car finance NZ then read on!

How much will a car loan cost me?

Make sure you check out our car finance NZ calculator on our car loan comparison page. The calculator gives you an indicative monthly payment and total payment amount for each provider. We use their establishment fee, monthly fees and their published rate. Just put in the amount you want to borrow and the number of years you want to borrow for and all our listings update. As most car loan providers provide a range of rates we use their lowest published rate to do this calculation. It’s very important that our users understand, these figures are provided as a guide only to help you compare each offering.

  • A quote from a loan provider is the only way to know exactly how much a car loan will cost you.

Bad Credit Car Loans NZ

Many New Zealand companies offer a variety of options when it comes to choosing the best car loans. Before making the final decision, here are some things to know.

Are there car loans for New Zealanders with bad credit?

A credit record is based on the borrower’s history, and will be lowered if there is a history of late payments or if there is no history at all. However, there are options for people who need car loans but who have bad credit. Bad credit lending is a specific sector in the market with specialist providers. We’ve shortlisted options here.

What are the average car loan rates in NZ?

Car loan rates compared on Finance.co.nz range from as low as 8.25% and go up to 29.97%. Auto loans for bad credit will lean toward the higher end of the spectrum. The stronger your financial position and your credit history, the lower the interest rate you will be offered.

Are There Alternatives to Taking Out a Car Loan?

Subscription Cars New Zealand

Of course you can just save up until you have enough or ask family for money but there is a relatively new way to finance a car which may be suitable. Some companies offer car subscription services that allow New Zealanders to use a car without having to outright purchase it. We haven’t reviewed any of these services yet but a quick google of car subscribers will show you these options. Snap Subscribe, Turners Subscription, Avis Flex, Europcar Superflex.

What is My Credit Record and How Does it Affect My Car Loan?

Your credit record holds the information concerning all the times you’ve been given credit by a bank or company and whether you’ve paid it off in time. Consequently, a car loan provider will check this to assess your credit worthiness for a loan. Understanding how to maintain a good credit rating is important, you can read about it at this government site.

What Do I Need to Apply for a Car Loan NZ

Here’s the list of things you’ll generally need to provide to get car finance in NZ.

  1. Be 18 years of age or older
  2. Hold a valid NZ drivers license
  3. Bank statements for the last 90 days
  4. Be a New Zealand resident or visa holder
  5. Proof of address
  6. A regular income

How to Pick an Affordable Car Loan

  • Do your budget first to find out how much you can afford.
  • Research – educate yourself so you understand the requirements and what makes your application strong or weak.
  • Remember you have bargaining power – they all want to sell you a car
  • Shop around, compare interest rates and fees, then decide which one offers the best car loans in NZ.
  • Get comparative quotes to ensure you know exactly what you are going to pay and whether the offer is fair.

Written by: Mike Fraher

Finance.co.nz Editor

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