A guide to car finance in NZ

Buying a car can be a significant financial decision, and for some New Zealanders, financing might be necessary. You’ll end up paying more for your car if you finance it, thanks to the interest charged. But if you are willing to accept this, the guide below outlines the common car financing options available in New Zealand. It includes steps to obtain car financing and important considerations to help you make an informed decision.

Bank Loans

Many banks in New Zealand offer personal loans that can be used to purchase a car. These loans often come with competitive interest rates, especially for borrowers with strong credit scores.

Car Dealership Financing

Many car dealerships provide in-house financing or partner with financial institutions. This option often includes promotions like low or zero-interest rates for new cars, though terms and conditions apply. 

Specialist Car Finance Companies

Companies such as MTF Finance, UDC Finance specialise in vehicle loans. They may offer tailored packages for different customer needs, including options for those with poor credit histories.

Peer-to-Peer (P2P) Lending

Platforms like Harmoney facilitate loans between individuals or groups, often with competitive rates. Borrowers’ creditworthiness significantly influences the terms offered.

Credit Union Loans

Credit unions often provide flexible, community-focused lending options. They may offer better rates and terms than traditional banks.

Assess Your Budget

Calculate how much you can afford to spend on monthly repayments, factoring in other car-related expenses like fuel and maintenance.

Check Your Credit Score

A higher credit score can lead to better loan terms and lower interest rates. Obtain a free credit report from agencies like Centrix or Equifax.

Compare Financing Options

Research and compare interest rates, terms and fees from various lenders. Use online calculators to estimate repayment amounts.

Get Pre-Approval

Apply for pre-approval to understand how much you can borrow.

Choose a Car

Select a vehicle that fits your budget and needs. Be mindful of additional costs like extended warranties.

Read more - What to know when buying a new car

Review the Loan Agreement

Carefully read the terms and conditions before signing. Pay attention to interest rates, fees and early repayment penalties.

Finalise the Loan

Submit all required documentation, including proof of income, ID and any other details requested by the lender. Once approved, complete the purchase.