Getting a Car Loan in New Zealand: A How-To 2024 Guide

Do you need a car in New Zealand? Well, yes, certainly, but not everyone can afford the purchase. Don’t worry; getting a car loan in New Zealand isn’t very difficult. The process is quite straightforward, and car financing options are readily available.

To get a car loan in New Zealand, you must be a resident or have a work visa. You should also know how much you can afford to spend monthly to pay off the loan easily. Then you can choose your lender. They will ask for a credit history and proof of income. Choose your car and payment plan, sign documents, and you are done.

​If you need to buy a car and don’t have the money to pay for it upfront, car finance can be a cost-effective option to get you in the driver’s seat. Alternatively, you can lease a car.

Cars prices in New Zealand (2023)

Can a foreigner get a car loan in New Zealand?

Foreigners can get a loan in New Zealand if they are residents or hold a work visa.

If you are a foreigner and have recently migrated to New Zealand, then you probably have no credit history in New Zealand to prove that you are good at repaying your loans. Also, if you don’t know a Kiwi person, the likelihood is that you won’t have a cosigner either. Good news, you don’t need both!

Admittedly, it’s hard for new immigrants to secure a loan – this is where your foreign credit history can become a lifesaver. 

When buying a car, don’t forget about the insurance, with Cove, you get a month for free by signing up through SimpleNewZealand.

If you don’t have any credit history in New Zealand and for any reason, your foreign credit history isn’t acceptable either, you can still get a loan, but the terms and interest rates might not be the best.

The good thing is that this is your chance to get a positive credit history. However, remember to double-check all car loan terms and ensure it’s affordable for you under all scenarios – you definitely don’t want a bad start for your credit history.

So, what are the main requirements for getting a car loan in New Zealand? Firstly, only New Zealand citizens, New Zealand residents, or work visa holders can apply for car financing. Here are the requirements:

• Be aged 18 or over
• To have a valid NZ Drivers license
• ID e.g., passport
• To have proof of address
• To have proof of income e.g., employer’s contract
• To provide the previous three months of bank statements or recent payslips
• To have full car insurance
• To have WOF for a vehicle

Additional details you will need to provide:

1. Your monthly expenses, including current debts/loans and any assets you own. 
2. Number plate and purchase price if you know which car you are buying.

A lender will need to calculate how much money left you have by the end of the month, so you can repay the loan.

Check out the cheapest cars in New Zealand that you can afford without getting a loan!

Top Cheapest Cars in New Zealand in 2024

How does car finance work in New Zealand?

If you don’t have a full car price, you are most likely going to take a loan. Car financing is very common in New Zealand, available for both new and used vehicles, and you will see them at almost every dealership.

Generally, there are two options to finance a car – through a personal loan or a car finance agreement. The latter is a loan specifically for car purchases offered by banks, finance companies, and car dealers.

In terms of where one can obtain a loan, there are also several options. One of the most popular forms to finance a car in New Zealand is via a finance company or a bank. Another option would be through car dealerships; most of them offer financing options. Their interest rates may be higher than those offered directly by banks.

AA Money, a car loan provided directly by the AA association, is a good option for drivers. Some other popular lending companies include:

• Simplify Loans
• Better Finance

Most car finance terms are up to 5 years in length. Early repayment can be beneficial, but check the lender’s fees and charges to know how much that will cost.

Deposit

Some lenders require a deposit, but most do not. It will depend on your credit history and risk profile. If the lender requires a deposit, it’s usually 10% to 20% of the purchasing price.

The process of financing a car in New Zealand can be summed up in XX steps:

Step 1: Determine your budget – based on your income, expenses, lifestyle, and other foreseeable variables, you can determine how much loan you should take. 

There are repayment calculators available, especially for the NZ market, that you can use to determine your ability to repay the vehicle financing loan. You can use the repayment calculator from any local website – many lending companies have their online calculators that you can use for estimates.

Step 2: Selecting a lender – Now that you know how much you can afford, do not send loan applications to many lenders, as it will reduce your credit score. When selecting your lender, consider both the fees and interest rate.

The process becomes smoother if you are getting your car from a dealer – they usually have their own finance partners. This way, the hassle of applying for car finance is taken off your shoulders. However, do your homework before agreeing to their finance partner.

Check out Simplify, they provide simple car loans at good terms.

Step 3: Show proof of income for approval – once you have selected the lender, you will need to provide proof of income so that you can get approval on your car loan application. 

Step 4: Select car and insurance – now comes the fun part, you get to pick a car and its insurance that fits your budget. Lenders usually require insurance for the vehicle, so do the math by including insurance in your budget. I recommend Cove insurance, they give one month of coverage for free.

Step 5: Provide documentation – there may be some documents you will need to provide and some paper or digital forms you need to fill in. 

Step 6: Once the loan is approved, the bank sends the money to your bank account or pays directly to the person or organization you’re buying the car from. In New Zealand, repayments are made weekly, fortnightly, or monthly. The loan term is typically between one and five years. But now you can start driving around in your own car!

You can also lease a car in New Zealand.

Know the risks

While the process itself is quite easy, you should be fully aware of the risks of taking a car loan. Circumstances don’t always remain the same, which means that any unexpected expense might leave you in a position where you can’t repay the loan that week (or for several weeks).

If you default and cannot repay your car loan, the lender can take away the car as well.

The interest rates can be quite tricky to understand. There may be hidden costs and admin fees that you might have missed in the fine print of the Terms and Conditions. 

For certain car loans, you might need a cosigner with you. This puts the other person under financial strain as well.

Car loans: interest rates

Interest rates on car loans range from around 7-10% p.a. to as high as 25% p.a., plus lending fees: the better your financial situation and credit history, the lower the interest rate. Each bank offers different interest rates. For instance, Simplify offers an interest rate of 9%, and AA Money offers rates from 9.15% to 16.15% p.a.

ANZ, one of New Zealand’s largest banks, currently offers car loans with a standard interest rate of 12.90% p.a. You can borrow between $3,000 – $50,000, and the loan term is 6 months to 7 years.

The cheapest interest rate deals will be on secured loans – this means the lender has a right to sell your car if you can’t make the repayments (exactly like a bank can sell a house if the mortgage isn’t repaid). 

What credit score do you need to buy a car in New Zealand?

The good news is that you can qualify for a car loan in New Zealand even with no credit score.

Generally, the NZ credit score ranges from 0 to 1000 and can be extended to 1200. A score ranging from 500 to 1000 is usually considered good.

Depending on your lender, a higher credit score may increase your chances of:

• An accepted car loan application
• A lower interest rate
• More flexible terms on your loan in general

The main requirement for a car loan in NZ isn’t to have an excellent credit history but be able to identify yourself and pay loan repayments on time. For the latter, you will also need to prove that you receive a regular income and that your monthly expenditure allows for a loan.

Best car loans in New Zealand 

Now that you know the process, eligibility, and all the steps involved, next comes the process of selecting the best car loans – don’t worry, we are not leaving you stranded here. Here are some of the best car loans where you should try your luck.

1. Banks and finance companies

Simplify

Loan amount	$5,000 to $150,000
Term duration	1 to 5 years
Interest rate	9.00% to 22.95% p.a
PPSR (security registration fee):	$10
Early repayment fee	Yes
Lending fees	$276 to $600
Ease of application and process	100% (online)

Visit their website.

Lending Crowd (peer-to-peer lending)

Loan amount	$2,000 and $50,000
Term duration	2, 3, and 5 year
Interest rate	From 8.95%
PPSR (security registration fee):	Free
Early repayment	Free
Lending fees	$250 to $650
Ease of application and process	100% (online)

Lending Crowd provides both secured and unsecured loans. Visit their website.

Better Finance

Loan amount	$3,000 and $200,000
Term duration	1 to 5 years
Interest rate	from 9.45%
PPSR (security registration fee):	$7.39
Early repayment fee	$7
Lending fees	up to $450 + introducer fee of up to $995
Ease of application and process	100% (online), same day payout

Visit their website.

ANZ Bank

Loan amount	$3,000 – $50,000
Term duration	6 months to 7 years
Interest rate	12.90%
PPSR (security registration fee):	Free
Early repayment	Free
Lending fees	Free
Ease of application and process	70%

*You must have a bank account with ANZ Bank to receive the loan.

2. Car financing with car dealerships

Besides traditional banks and finance companies, you can finance a new car directly with the car brand you are looking to buy.

• Toyota Finance

Toyota has a range of reliable cars that are loved by Kiwis. If you are buying a Toyota vehicle, you can consider using Toyota Finance for better rates on both new and used cars. They offer an online finance calculator so you can estimate how much you will be paying per week or fortnight.

• Honda Finance

Honda Finance is another popular option because many Kiwis looking for new and used cars opt for Honda vehicles. Their financial services are available both for individuals and companies.

• Holden Finance

If you have been eyeing a Holden car, you can check the terms and conditions and applicable rates on Holden Finance. Their website has a breakdown of all applicable fees so you can see how much you pay for every service and step.

• Mazda Finance

A variety of options are available from Mazda Finance. There are a number of dealers across New Zealand who provide finance for Mazdas.

Car Prices in New Zealand: New & Used [2024]

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