Car Loans

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Car loans are a popular way to finance a vehicle in New Zealand and can be used to fund the purchase of your first car, a work car, or a new car.

Most lenders in New Zealand offer car loans provided you have a restricted licence, and many lenders also provide competitive rates if the car is used to secure the loan.

What is a car loan?

Car loans are a type of personal loan used when you want to purchase a vehicle. You can usually borrow up to around $50,000 in New Zealand to purchase a brand-new vehicle.

Just like most personal loans, a lender will approve you for a certain amount, which you can then use to purchase your car. You can apply for a car loan with your bank or specialist lenders, directly at a car dealership, or by using a broker.

You can qualify for a car loan in New Zealand if you are:

  • 18 years or over
  • A permanent NZ resident or hold a work permit or visa allowing you to reside in New Zealand
  • Currently employed with a sufficiently stable income to repay the loan amount
  • Learner or Restricted Licence

Most lenders can also provide loans if you have a restricted licence, though to receive approval for a car loan on your learner licence you’ll need to be:

  • Minimum of  22 years old
  • Currently employed permanently
  • Without defaults and have a clean credit history. 

If you meet the basic eligibility for a car loan, you will then need to compare lenders and assess their individual approval criteria. Many lenders offer secured car loans in New Zealand, including some that offer loans suited for vintage purchases or specialist vehicles.

If you meet the standard qualifying criteria for a car loan, you can calculate how much you can borrow and compare lenders to find the best loan offers available in New Zealand before applying for a loan.

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Is a car loan the same as a personal loan?

Car loans are similar to personal loans, but with the main difference in how you use the loan and how that is viewed by a lender. 

  • Personal loans can have variable uses, but car loans are specifically used toward the purchase of a vehicle - a major asset that can then be used to secure the loan amount with the lender.
  • While you don’t have to provide your vehicle as security on the loan, doing so results in lower rates applied to your loan, which means less cost to you when repaying it. 
  • The amount of money you can borrow for your car and the rate of interest applied to your loan will vary depending on the lender and the type of vehicle you wish to purchase, though you can usually borrow more with a secured car loan.
  • Certain lenders will have conditions on the vehicle you can purchase and the minimum loan amount, to ensure the vehicle you purchase has enough value to function as collateral.

However, this also means that people without existing assets are able to apply for a loan, as their vehicle will serve as collateral.

How to choose a car loan

Car loans are best used when secured with the lowest rate on offer. New vehicles are always the easiest to approve, as they have no mechanical wear to depreciate their estimated value as security. 

Most lenders can provide auto-approval on application if you are:

  • A homeowner (or already own a vehicle of value)
  • Employed with a clean credit history
  • Able to show you can make repayments.

You’ll also have plenty of choice in where to get your car loan from, including dealerships and non-bank lenders. 

Car dealerships provide convenience if you’re getting your car in the showroom, but they’re commission based and often don’t provide the best deal on offer. 

If you don’t fit the ideal criteria for a car loan, you might want to speak to a broker who can help you find a loan and complete your application in return for a small fee.

See If You Qualify For A Car Loan

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