How financing a car works in New Zealand


Paying cash to buy a car is not affordable by everyone. When a car is the basic necessity to live a peaceful life, there are a lot of options to finance a car in New Zealand. It is quite challenging to go for car finance for the first time when you don’t know the whole procedure and outcomes. Buying new wheels sounds exciting but it can impact your finances and can upset your future budgets. So you have to think wisely and research properly before going for car finance NZ.

I have covered basic things you should know before financing a car in New Zealand below:

Options for car financing:

You should go through all the car financing options and see if it has an affordable impact on your finances. Buying a car loan is not that simple and you must decide carefully after going through your finance history and budget. There are a lot of car financing options you can choose to go for once you have decided to go for it. Choose a trustworthy and confident agency that has clear objectives and interests.

Following are the major car financing options available in New Zealand:

  • Bank loans
  • Non bank loans
  • Car dealership loans
  • Extending a mortgage
  • Finance company

Each option has its pros and cons and you are the one who has to decide after analyzing the situations carefully. In most cases, a finance company or a car dealership is the best option to go for because you can get less interest rates here.

Find affordable interest rates:

Interest rates on cars vary significantly. Go through every option available and look for a low interest rate that you can easily pay after the agreed time. There is a low interest rate on car loans which have a car as surety. This means that the lender has the right to take your car if you fail to pay the interest as it was agreed. You can look for lenders who are already in your contacts or your relatives’ contact to get more discounts.

Examining the charges:

Getting a car loan involves proper documentation and agreements which require some fees or charges. Nothing is for free. When you apply for a loan, you have to pay its initiation fees and some other advanced payments that are then added to the actual payment later. You should ask your lender to give you the exact plan and payment sequence so you do not have any doubt about the whole process. Your lender can offer you some insurance or security fees which can exceed the interest rate. So always compare all the charges with the actual interest rate and price of the car before calming anything with your lender.

Statement of disclosure:

Statement of disclosure is expected to be given by the lender that includes all the charges, fees, what should be done in case the borrower cannot repay the loan, interest rate and how the interest is calculated. Always carefully read the disclosure statement and make decisions accordingly. It summarises the journey of borrowing a loan and then repaying it.




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