Car Finance
New Zealand Car Finance
After a property, purchasing a vehicle is the second largest financial commitment most New Zealanders are likely to make. Thinking of buying a car? Buying on finance? Read on to take a look at car finance options in New Zealand: what is available, how it works and the do's and don'ts of financing a motor vehicle purchase.
The NZS.com New Zealand car finance article contains information on motor vehicle and new car finance, auto dealer finance and car finance credit in NZ.
On average, New Zealanders purchase a vehicle every three years. A large number of these purchases are made using car finance loans. There are many alternatives awaiting the prospective buyer, so it pays to take some time and do your research before you take the plunge. Although you may think you really need that shiny red convertible today, exploring the New Zealand car finance options will save you a lot of money in the long run.
Finance can be approved through several sources including banks, finance companies, credit unions, societies such as the Automobile Association, and individual car dealers. Vehicle leasing is another option as an alternative to finance. Let's take a look at these choices:
Banks
Many New Zealand banks offer a personal loan for vehicle finance; you may be able to adjust an existing loan with the bank to accommodate the vehicle. The advantage of dealing with the bank is generally you'll already have an existing relationship with them (this may mean a better rate), and in the case of having a home loan this line of credit may be able to be extended. The loan will be in almost all cases pre-approved, which lets you know exactly how much you can spend and gives you the power of a cash buyer.
Finance Companies
New Zealand car finance is available from numerous finance companies. It pays to shop around as rates can vary between lenders by as much as 8% or 9%. Car finance loans can be drawn directly through the finance company, or through a third party such as a dealer on behalf of the finance company. Different companies will be appropriate to different buyer's needs, as some may have stricter credit criteria, while others specialise in offering services to those with bad credit., discharged bankrupts, previous defaults on payments and repossessions.
Credit Unions and Credit Societies
New Zealand credit unions offer their members vehicle finance at what is generally a very reasonable rate. However, you do need to become a member to qualify for their products, and this requires some commonality with the other members of the union, for example in geographical location or by employer. But once you are a member, credit unions are an excellent option to look at for car finance. Again, pre approved loans and the power of a cash buyer are advantages of a credit union motor vehicle loan.
Dealer Finance
Used or new car finance from car dealers is sometimes seen as slightly shifty and unscrupulous, with images of dodgy loan sharks pushing the buyer into a loan in order to get the sale. However, the reality in New Zealand is different, with many New Zealand auto dealers offering attractive and reputable finance packages. The auto finance offered by car dealers can either be through the dealer on behalf of a finance company or by the dealer's own finance division. Compare the finance offered at the yard impartially with your other options and don't be swayed by an emotional pull to buy the vehicle on impulse, without some proper analysis.
Vehicle Leasing
Leasing a vehicle in New Zealand is a useful alternative to NZ car finance for some prospective buyers. The benefits of leasing include:
- The user not having to bear the costs of ownership
- Generally lower payments than the costs of paying off a significant finance deal
- If the vehicle is leased under a company structure the costs are tax deductible and the operating lease does not appear on the balance sheet, improving the companies financial position
- Many leases are fully maintained operating leases, which mean all costs of registration, vehicle maintenance, repair and service are covered by the monthly payment
However, leasing is not for everyone, as it can often prove expensive over the long term. At the end of the lease, there are several options available to the lessee, depending on the terms of the agreement. The lessee may continue to lease the vehicle, make an offer to buy the vehicle, upgrade to a new vehicle, or return the vehicle to the owner.
As most New Zealand vehicle buyers will enter into some sort of finance or lease agreement at some stage in their lives, it is essential that they take care to evaluate the options available before choosing one. Negotiation with the seller is expected and can result in a much lower price, especially with a pre-approved loan. There are a lot of excellent deals out there, so don't be afraid to bargain. Your enjoyment of your new car will be enhanced by knowing you have got a good deal on its finance.
Looking for more information? Find New Zealand car finance in the NZS.com directory.
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Motoring images from Flickr: Car Finance, Traffic Lights and Motorway.
