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Car Loan Terms You Need to Know

Monday, 13 December 2021

Car Loan Terms You Need to Know

Should buying a car in New Zealand be stressful in this era? With the availability of financial experts like Kiwi Car Loans that help potential car owners all-round, owning a set of wheels is now exciting. But the truth is the process of acquiring a car loan remains an uphill task to many first-time buyers.

It’s because of the borrower’s minimal understanding of the terms used in vehicle loan applications. Knowing the basic terms makes the shopping, documentation, and financing of a new or used car less confusing and straightforward. That said, here are typical car loan terms in NZ you should know:



To whom do you submit your loan request? It could be a dealer, an vehicle financing company, or a bank. A lender is an institution that agrees to finance your car or vehicle purchase.



When you decide to take out a loan, you become the borrower. Meaning you must accede to lender terms. Meaning you must adhere to the lender terms. For any loan to be considered valid, the borrower must sign an agreement to evidence their understanding of the loan terms and conditions.



It refers to the amount borrowed. Simply put, it’s the initial loan amount you owe a lender. For instance, if your initial loan size is $25, 000, your principal is $25,000.


Interest Rate

Once you go for an vehicle loan, the lender you settle for will charge you a fee (in percentage) on top of the amount loaned. That’s the interest rate. It varies from one lender to another. So, compare various offers and choose a financing option you’re comfortable with, considering the prevailing market conditions.


Annual Percentage Rate (APR)

It’s the annual cost charged for borrowing money. Like an interest rate, APR does influence how much you pay for taking out an auto loan. However, it takes the border measure of your borrowing price as it reflects the interest rate and other fees charged on loan. Compare different financiers’ APR and interest rates when shopping for a vehicle loan.


Loan Tenure

It’s also referred to as loan maturity term or date. It’s the period within which you should clear the total loan cost, which includes the principal amount and interests accrued. Your loan tenure can be either short-term or long-term. Short-term car loans should be cleared off within 1-3 years, while long-term loans last up to 7 years or more.


Credit Score

A credit score is a numerical expression used to define your creditworthiness. While it doesn’t affect your auto loan finance approval all the time, it does influence the terms and conditions of your financing. For some lenders, your credit score will determine whether your loan request will be approved at favorable terms or not. You can find more on Credit Simple’s website regarding credit score.



It’s used when the borrower breaches the loan agreement. It’s the term used when means the borrower breaches the loan agreement. When you default, you stop paying your loan. When you stop paying your loan during your loan term, you default. Doing so affects your credit, threatening your financial wellbeing.


Vehicle Title

It’s a legal document approved by the NZ Transport Agency indicating the valid owner of the car. The document also shows the vehicle identification number, model, make, and other vital car details.


Kiwi Car Loans Does More Than Financing Your Purchase

Looking for the best car financing partner in NZ? Look no further. You can now depend entirely on Kiwi Car Loans. As you come across confusing used cars loan terms and new car loan terms, our experts will take time to review every detail on the auto loan documentation for your complete understanding. We want you to have fun and be confident in every step of your car buying process.



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* Interest rate is indicative range only.


10.45% 19.95%

$27,921 Apply Now

* Interest rate is indicative range only.