What are the most popular options for financing a car in New Zealand?

When cash is not an option to buy a car, many Kiwis turn to car loans. But just getting a loan isn’t that easy—there are many options for auto financing, each with their own advantages and disadvantages. Here is the breakdown:

Bank loan

All major banks in New Zealand offer personal loans that can be used to buy a car.

However, they also often have specific lending criteria that not everyone will meet.

Personal loans from banks have an unsecured option, which means that cars bought with them can be sold, given away or scrapped without any further steps.

Strict standards. Banks may be less likely to accept applications if someone has difficulty showing stable income (such as being self-employed) or has a history of defaulting on repayments.

Non-bank car loan

Financial companies, credit unions, and non-bank institutions are all popular sources of auto loans.

These companies typically offer specialized auto-specific loans. Advantages Non-banks generally serve a wider range of clients. Self-employed or those with lower credit ratings may be more likely to be accepted by non-banks than by domestic banks. broader criteria.

Non-banks have broader criteria and trade more borrowers and prices accordingly. For customers with better credit, the interest rate can be lower than the big banks. Disadvantage rate.

Non-banks can use a “sliding rate scale” or offer auto loan products with multiple different rates. If someone has bad credit, they may have to pay more interest.


Car dealer loan

Many car dealers offer car loans in their showrooms. These loans are usually not provided by the dealer itself, but by an affiliated bank or non-bank lender that has a relationship with the dealer.

Professional loans can be applied for through a dealership as part of the car buying process. special promotion. Partner with automakers and/or dealers to offer flexible terms and promotions. Limit options.

A dealer may only have relationships with one, two or three lenders. Credit options may be limited.

Estate agent

Auto finance brokers do not lend directly. Instead, they will find the right auto loan on behalf of the borrower. This will be done by non-bank lenders, with brokers using their expertise to find the best deal. They may charge a fee, but this can often be added to the loan.

Instead of going from lender to lender, borrowers simply work with a broker who handles negotiations and paperwork on their behalf. Many options. Brokers usually know many lenders who can offer auto loans.

ConsBrokers can usually disburse loans quickly, but in complex or unique situations, it may take longer than expected.