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How Do Car Loans Work?

How Do Car Loans Work?

Tuesday, 26 September 2023

In New Zealand, having a car is not just convenient, it is a necessity. However, if you don’t have enough money saved up, have you ever considered getting a car loan to purchase a new or used car? If so, you are not alone. Many Kiwis now prefer car loans. 

Nevertheless, not everyone is familiar with how car loans operate, the various financing options available, or where to find the best car finance deals. In this comprehensive car finance guide, we will provide you with all the information you need to understand how car loans work and make more informed choices.

What is a Car Loan?

A car loan or vehicle loan is money borrowed from your preferred lender to buy a car. The lender will then provide the funds for the car purchase, and you agree to repay the borrowed amount, along with interest, in monthly installments and within the agreed timeframe.

There are two types of car loans: secured car loans, where you need to provide collateral (usually the car itself) as security, and unsecured car loans, which do not require collateral but put more emphasis on your credit score. Depending on your preferences and circumstances, it can be beneficial to consult a finance advisor who can help you find the best loan option for your needs. It is important to compare the interest rates and terms offered by different lenders and choose the option that suits you best. 

Where can I get car finance?

  • Direct lending from providers like banks, credit unions, or vehicle finance online lenders.
  • Dealership financing is where you get the car and finance from the same dealer.

How do Vehicle Loans work?

Signing a loan agreement initiates the process of acquiring vehicle loans in NZ. The agreement stipulates the amount borrowed, repayment duration, down payment (if needed) and the interest rate charged on loan. Coupled with other parameters like credit score, income, expenses, and debts. Potential car buyers should clearly understand the loan monthly payment fee and agree to make fixed payments either weekly, fortnightly, or monthly.

Here are the standard terms and what to know as you seek car finance:

Loan amount: Go for the amount you can comfortably pay for your car loan every month.

Down payment: It’s what you may have to pay upfront to secure car finance. A high amount means increased chances of approval, lower interest, and decreased monthly payments.

Loan term: It is the time you take to pay off your vehicle loan. The term could range from 24 months to 60 months.

Interest rate: Expressed as Annual Percentage Rate (APR) is the percentage of the principal a buyer charges you on borrowed money. Your interest will vary based on vehicle type, down payment, loan term, and credit score.

To learn about all important vehicle loan terms, check another blog.

Get the Best Car Finance Deals Today!

Understanding how car loans NZ works is the first step towards owning your next new or used car. By comprehending the process, you can adequately prepare yourself and make more informed choices. So, what should you do next? Seek out a vehicle finance intermediary who possesses a thorough understanding of your unique requirements and situation, and can secure the most favorable interest rates possible. This is where Kiwi Car Loans steps in. To fulfill all of your car financing needs, contact us today.

See how affordable your dream is with our calculator

$
LOANS RANGE FROM $5,000 TO $250,000

PAYMENT FREQUENCY

% p.a.

OUR INTEREST RATES VARY BETWEEN 9.95% AND 23.00%.

48 MONTHS

12 MONTHS 84 MONTHS

CALCULATE
$

PAYMENT FREQUENCY

% p.a.

OUR INTEREST RATES VARY BETWEEN 9.95% AND 23.00%.

48 MONTHS

12 MONTHS 84 MONTHS

CALCULATE

*Our fixed interest rates vary between 9.95% and 23.00%, and the rates you receive will depend on your individual circumstances. There is a loan establishment fee starting at $510, a PPSR fee from $7.39, and a monthly administration fee from $2.17. Approval for financing is subject to Kiwi Car Loans' Terms and Conditions, lending criteria, and responsible lending standards.

COMPARE INTEREST RATES & LOAN TERM & REPAYMENTS
COMPARE RESULT WITH A DIFFERENT:
INTEREST RATES LOAN TERM LOAN AMOUNT REPAYMENTS
% p.a.

OUR INTEREST RATES VARY BETWEEN 9.95% and 23.00%

MONTHS

OUR LOAN TERM VARIES BETWEEN 12 MONTHS AND 84 MONTHS

$

LOANS RANGE FROM $5,000 TO $250,000

$

LOANS RANGE FROM $5,000 TO $250,000

ORIGINAL COMPARISON
Interest rate
-
Monthly administration fee
From $2.17
From $2.17
Loan establishment fee
From $510
From $510
Personal property securities register fee
From $7.39
From $7.39
Loan Amount
-
Total to repay
-
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