Car Loans NZ

How to get the best car finance in NZ (with our help)

Need a stress-free, low-interest car loan for your next vehicle purchase?

We’re highly-experienced car finance brokers who can help you find the best deal by comparing multiple New Zealand lenders for you at once.

This is what we look for when finding car finance that will save you money:

1. The right kind of car finance: Car loans are not one-size-fits-all. Knowing whether to choose secured or unsecured finance, and whether to get a fixed or variable rate on your loan will make a big difference to how much you pay.

2. The lowest interest rate: We’ll save you time by finding you the lowest rates you qualify for from multiple lenders. Sometimes smaller lenders you haven’t heard of (but we have) will offer the best car loan rates.

3. Low car finance fees: There’s no point securing a low-interest car loan if your savings will be cancelled out by fees. We’ll help you minimise application fees, loan maintenance fees and any other fees buried in the loan fine print.

4. The shortest loan term possible: Most borrowers don’t give the loan term too much thought. We do. If you can afford slightly higher regular repayment on a shorter loan term, this will bring your car finance costs right down. We’ll help you find the sweet spot.

5. Loan flexibility: A car loan with flexibility on repayment frequency and the freedom to make extra repayments can make your budgeting simpler, and allow you to get rid of your car loan sooner.

6. Finance pre-approval: Getting your finance pre-approved before you go to the car dealership gives you stronger negotiating power. It also means you can say a big ‘no thanks’ when the dealer tries to sell you expensive car finance.

Secured vs unsecured car finance

Knowing the difference between secured and unsecured car finance is key to getting the best deal. As you’ll see in the comparison table below, a secured car loan is usually going to be the cheapest car finance option.

How can I get the best interest rate on a car loan?

Car loan interest rates in New Zealand in 2023 start from around 9% p.a. and can go all the way up to 30% p.a. or higher for bad credit car loans. A current trend is for lenders to offer their lowest rates on EV loans.

The trouble is, how do you know what rate you’ll get when the range is so massive? If you apply with a bank, you won’t know what car finance rate you qualify for until you apply. That application goes on your credit history, even if you don’t go ahead with the loan. The next lender you check your rates with will see the previous loan application and might offer an even higher rate.

A better way to check car loan rates is to compare pre-qualified rates from multiple lenders through a broker like Vehicle Loans. We’ll ask you some simple questions to understand your situation and then show you proper rate quotes, not advertised rates you won’t qualify for.

Borrowers who tick all of the lender’s boxes get the lowest rates and are often auto-approved, meaning you will receive an approval for your car loan instantly. Of course, your rate will also be different depending on where you get your car loan.

Where to apply for a car loan: dealer vs bank vs broker

There are a few different ways of applying for a car loan: through your bank, directly at a car dealership, or with a dedicated vehicle finance broker.

Car Dealers

If you visit any car dealership, it's highly likely they'll offer finance alongside their vehicles.

While applying for car finance at a dealership can be convenient,the fees and interest rates on dealer finance are often quite the opposite.

This is generally tied to the idea that car dealers are salespeople and the finance they offer is simply another sales tool to get buyers across the line. Ensuring the car finance is the best value for the buyer is not necessarily the priority.

This can often mean interest rates available through dealers are higher than through your bank or a broker.

Banks

Getting vehicle finance through a bank is the most common source of funding for many car buyers.

In many cases, this comes down to familiarity. Many people have been with the same bank their entire lives, and there is a perception of security offered by dealing with a large financial institution with a branch down the road.

But like car dealers, many banks rely on these factors, and not necessarily their car loan rates and fees, to convince borrowers to sign up for a loan.

Another important thing to look for when applying for car finance through a bank is how they plan to structure your finance. While it may seem like a no-brainer to simply add the car loan amount to a pre-existing mortgage with the bank, this can translate to unnecessarily high levels of interest repaid over a 20-year mortgage term compared to car loan with a much shorter term.

New Zealand’s currently high mortgage rates can make a ‘home loan top-up’ a particularly expensive way to finance a car.

Brokers

Car finance brokers specialise in assessing your personal circumstances and presenting the most suitable options for financing a car.

Most brokers work with a pool of trusted, specialist lenders, and have an expert understanding of their lending criteria. This translates to a better, and more suitable, deal for the customer plus a smooth application process.

A broker works for you and will be incentivised to understand your financial position, advocate on your behalf and ultimately find you the best deal possible where other institutions may not. Brokers can also offer specialist services for borrowers looking to buy rare vehicles, or even people financing a caravan loans or looking for a boat loans.

Better still, brokers are also bound by the Responsible Lending Code, which means you'll get the same level of consumer protection as you would through a bank.

Who can apply for a car loan in New Zealand?

While every lender has different eligibility criteria, you can apply for a car loan if you are:

• 18 years of age or older; and
• A New Zealand citizen or holding a work permit or permanent resident (PR); and
• Currently employed or have regular income; and
• Holding a minimum of a New Zealand learner licence.
• You will also need to provide photo identification and proof of address.

Depending on your personal circumstances and credit history, there will be variations on how the car loan application process works and how much you can borrow. - In general, the younger you are, the more conditions there will be around obtaining a car loan.

Likewise, if you’re not employed, or are receiving a benefit such as Jobseeker Support or Sole Parent Support, you will need to provide evidence of your financials and a list of assets (if applicable) to meet the lender's criteria based on the Responsible Lending code.

If you're interested in seeing if you can apply for a car loan, the team at Vehicle Loans can conduct a quick-and-easy No Credit Check Pre-Assessment. Simply call 0800 651 480 now and speak to one of our trusted vehicle finance brokers.

Our team can advise on your eligibility for a car loan without needing to apply for a credit check.

What will I need to apply for vehicle finance?

Before approving your car loan, lenders will generally ask you to provide:

• Photo identification (passport or driver licence)
• Proof of address
• Proof of income (e.g. pay slips)
• Recent bank statements

How long does it take to approve a car loan?

An approval for a car loan through a broker typically takes only a couple of hours, while an application with a bank can take a couple of days.

This is mostly due to the paperwork process of applying for a loan through a bank, which may require multiple people to approve an application, as opposed to specific motor vehicle lenders.

Once our brokers at Vehicle Loans have all the required information from you, we can typically have an approval completed within an hour.

Car loans FAQ

What is a car loan?

A car loan - also known as car finance, or vehicle finance - is a personal loan used by an individual to purchase a vehicle. You can apply for a car loan with your bank, at a car dealership, or through a dedicated finance broker.

Just like most personal loans, a lender will loan a specified amount to a borrower, which they will then use to purchase a vehicle. The borrower will agree to repay the loan, plus interest, through weekly, fortnightly, or monthly instalments, until the full loan amount plus interest is repaid.

The amount of money you can borrow for a car loan, the rate of interest applied to your loan, and the frequency of repayments, will depend on your personal circumstances and who you choose to apply for a loan with.

To see if you can apply for a car loan, speak to one of the Vehicle Loans brokers today.

Are car loans and personal loans different?

A car loan is very similar to a personal loan, with the main exception being that your vehicle can serve as a security for your loan. Because of this interest rates on car loans are lower than personal loans.

Can I still apply for a car loan on a learner licence?

Yes, although your options will be more limited, and you might find yourself paying a higher interest rate than a borrower with a higher tier of driver licence.

To receive approval for a car loan on a learner licence, you will generally need to be at least 22 years old, currently employed on a permanent basis, and have a clean credit history.

At Vehicle Loans, the lenders we work with are willing to consider applicants on a learner licence, though each of them has different criteria for approval.

In general, upgrading your learner licence to a restricted licence will make getting car finance more straightforward.

Can I apply for a car loan if I don't own a home?

You can still apply for a car loan if you don't own a home or any considerable assets, but you might need to accept a slightly higher rate of interest.

In this case, your broker will assess your situation by looking at:

• Your employment history and whether your current position is short-term or long-term employment
• The length of time you have lived at your current address
• Your credit history

As a broker's job is to secure the best deal possible for the borrower, they will benefit from receiving upfront information and transparency in your application. You can’t hide your credit history, but a broker can advocate on your behalf if you can give examples of your current financial stability.

Can I apply for a car loan if I have bad credit?

In general, yes.If you can prove that you have taken steps to improve your credit score, applying for a car loan and getting approved shouldn't be a problem.

Vehicle Loans works with a number of lenders that will look past previous credit issues if the borrower is otherwise in a good position. Our brokers will start by assessing your situation through a No Credit Check Pre Assessment.

Will applying for a car loan affect my credit rating?

Credit applications go on your credit report and could impact your credit score in the short term. In the long run, your credit score will likely return to where it was and may even improve as you demonstrate capacity to manage your loan by paying it off consistently. What’s important is avoiding unnecessary credit applications.

This is why the brokers at Vehicle Loans offer a quick-and-easy No Credit Check Pre-Assessment, allowing you to check your eligibility and indicative car loan interest rates, without needing to actually submit an application. It means you can compare car finance options without any risk to your credit score.

Can I get a car loan with a broker and purchase a car from a dealership?

Absolutely, and it’s an easy process for you. We'll notify the dealer that your finance has been approved and request the required paperwork from them i.e. a vehicle offer and sale agreement and Consumer Information Notice.

We'll then send the finance agreement to you, with specific instructions on what you have to do. Once you return the paperwork to our team, we submit it to the finance company for settlement, and inform the dealership that you're approved to pick up the vehicle.

What happens if I can't find a car or change my mind once approval has been granted?

If you get car finance through Vehicle Loans, our brokers will conduct one set of inquiries and get you approved. Once you're approved for your car loan, you have a set amount of time (usually 15-20 days) to purchase a vehicle, whether it be at a dealership, through a private sale, on TradeMe, or at auction. You can change your mind as often as you like within the pre-approval period.

This gives you the freedom and breathing room you need to make the right choice about which vehicle to buy. You aren't tied down to a specific dealership or selection of cars. By contrast, if you opt for a car loan through a dealership, your loan approval will be specific to that dealership alone.

Can I apply for a car loan for a private vehicle sale?

Absolutely. In fact, your broker will offer a greater level of personal assistance in a private sale than you might receive from your bank or a car dealer.

For private vehicle sales (e.g. if you find a car on TradeMe) the brokers at Vehicle Loans can perform the checks on the vehicle to ensure the vehicle is free of finance and not been reported as stolen, generate a private sale agreement, then present this to the purchaser and the seller to sign.

Once we've touched base with the seller, we can let them know we have your finance approved, send them some paperwork to sign, and then send the finance agreement to you for completion.

As your broker, we will pay funds directly to the seller. Our payments go in overnight, which means once approval has been finalised, all funds will be in the seller's account the following day and you can pick up your new car.

What protection is available for my vehicle and car loan through a broker?

As brokers, it's our duty to ensure you're protected both in your loan repayments and in your purchase. When applying for a car loan, we'll offer additional protection suitable for your vehicle:

• Mechanical warranty with Mechanical Breakdown Insurance - Mechanical Breakdown Insurance covers the cost of repairing mechanical or electrical parts as a result of a sudden and unforeseen failure and breakdown that occurs during normal use in New Zealand.
• Guaranteed asset protection - Guaranteed Asset Protection Insurance protects you against losses that may occur when your vehicle is declared a total loss, and as a result the total loss settlement amount paid by your vehicle insurer is less than the outstanding amount you owe to your financier for your vehicle loan.
• Payment protection - Payment Protection Insurance protects your loan repayments if you suffer an insured event - such as redundancy, severe illness, or disability.

When you express interest in purchasing a vehicle and applying for car finance through Vehicle Loans, our brokers will discuss the most suitable options available to you.

Do I have to pay to apply for vehicle finance?

Vehicle Loans does not charge borrowers when helping them find and apply for a suitable car loan.

Lenders and insurers pay Vehicle Loans a fee, commission or brokerage fee for processing the application and settlement of a finance agreement.

Any fees you are charged by the lender will be fully disclosed and agreed with you before you sign the loan documents.

Vehicle Loans operates under the Credit Contracts and Consumer Finance Act (CCCFA) and all finance arrangements provided by Vehicle Loans are compliant with this Act and follow the guidelines under the Responsible Lending Code advised by the Ministry of Consumer Affairs.

How do I apply for a car loan with Vehicle Loans?

Applications are very quick and easy.

You can apply online or you can call us free on 0800 651 480, and one of our experienced consultants will run through your application and finance solutions with you.