How to Choose The Right Car Loan in NZ

Choosing the right car loan lender in NZ.

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. This money is paid back to the lender over time, with interest. Borrowers take out car loans so they can purchase their vehicles immediately, without having to save for months.

The Benefits of Taking Out a Car Loan

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. 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 could be required if 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 in New Zealand

Purchasing a car can be exciting. But before heading out to purchase that perfect car, decide what would be the best option amongst these best car loans in NZ.

1. Simplify

Simplify is an online company that acts as a middle man for borrowers looking for the best auto loans. It compares and negotiates with different lenders to find the best rates. It also offers 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 applyFill 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, they also offer online and phone based applications.

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 establishmen 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 with your interest rate, borrowing ceiling and repayment options in 7 minutes, and 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 meaning lower fees and interest rates for you.

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 – Be 18 years old or over. Be a NZ citizen or permanent resident. Have a NZ drivers license or NZ passport. Have a NZ bank account. Have 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 applyApply 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. Finly provide 100% borrowing of car value and can help with insurance.

Interest rates and fees: Interest rates are 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, an New Zealand citizen or an acceptable visa holder, and have a permanent address.

How to applyComplete 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 a collateral attached to the loan. It also does not 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: Interest rates vary 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 applySelect the ‘Apply Now’ button on the site and begin an application using Facebook, Google, or an email address.

What You Should Know Before Choosing an Auto Loan

Many New Zealand companies offer a variety of options when it comes to choosing from 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 score can help lenders determine if a borrower is trustworthy enough to pay back the loan. It 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. But there are options for people who need car loans but who have bad credit.

What are the average car loan rates in NZ?

Car loan rates range from as low as 5.03% and go up to 24.95%. Auto loans for bad credit will lean toward the higher end of the spectrum.

Are there alternatives to taking out a car loan?

Consumers looking to purchase a new vehicle can avoid taking out a car loan by saving up enough money to purchase the car outright, buying a used car instead of a new one, or asking for donations or a loan from family members or friends.

Additionally, some companies offer subscription car services that allow New Zealanders to borrow a car for a short amount of time without having to outright purchase the car.

How to Pick an Affordable Car Loan

  • Finding the right loan doesn’t have to be difficult. All it takes is some research done ahead of time to determine which company will offer the best deal.
  • Decide what car is the right choice and how much it will cost. Determine monthly income and expenses to better understand if a car is affordable right now. If it is, then finding the right repayment plan is the next step.
  • Understanding the requirements from each lender will also be helpful in picking the right lender. Shop around with different lenders, compare interest rates and fees, then decide which one offers the best car loans in NZ.

Compare Car Loans

See our full list of car loans here