Car Loan

Get a Car Loan in New Zealand

Getting car loans in New Zealand (and anywhere in the world) is not as easy as it once was, but you can still get a car loan from a car dealer, bank, credit union, finance company or other car loan lender if you have good credit history.

• Car Finance
• Loans

Prior to mid-2008, getting a financial loan was reasonably easy. You could find a car finance company left, right, and centre, and once you'd decided to buy you could often put several finance companies at war with each other to get your business by offering you the best interest rate and loan terms.

Today, many of these car finance companies have desisted owing to the credit crunch, and getting a car loan is not quite as easy. Financial lenders, whether they are finance companies, credit unions, banks or the car dealers themselves, are much less likely to take a gamble on you and give you a loan - as they are the crux of the world's financial troubles and need large chunks money in the bank, not small weekly payments.

The criteria for a car loan is much stricter now than it once was. Previously, the popular image of sly car dealers who convince you to make a purchase they know you can't afford may have rung true, but today car dealers are focusing their energy on buyers with cash or solid credit.

It is no longer in the best interest of financial lenders to convince you to take on a loan with payments you can't afford in hopes of getting the penalty payments from you - it is because of this that so many companies have been wiped out recently: unstable lending. This has been, in effect, the core of the world financial crisis.

However, it is still possible to get a car loan.

Pre-Approved Loan from a Bank or Credit Union
Your bank or credit union will be able to offer you a pre-approved sum of money if you have good credit history with them. If you've successfully paid off a loan before, or have a current loan in which you've never faulted on, you have a good chance at getting a car loan.

While you need to make sure you're getting a competitive interest rate, a pre-approved loan is a very good way to bargain down the purchase price on a car at the dealer because it can be considered as good as a cash sale.

Revolving Credit Extension to your Mortgage
If you're a homeowner, you can consider tacking on a car loan to your revolving credit. This will let you borrow the full amount for the car at your mortgage rate, which may be much lower than the rate any other loan provider can offer.

This option will extend your mortgage time, and end up costing you the most money in the long run. If you do decide to extend your mortgage, it's a good idea to up the repayments to pay off the car-related debt faster - in a year or two - rather than simply tagging the purchase price onto your 20 or 30 year mortgage.

Dealer Loan
Getting a dealer loan through their finance company comes with harder criteria to pass today than it once did. As car dealers struggle to sell cars and pay their own debts, they are much less likely to want to make a sale through dealer finance.

If you've got good credit, it's a great time to buy a new car. The reality is however, that auto lenders are increasing stingy with money and more and more potential sales aren't going through because the loan candidates can't qualify the stricter criteria.

The availability of credit is the biggest problem for those wanting a dealer loan - companies are tightening the total amount of new loans they want to set up, meaning they are carefully picking who to give them out to.

If they do approve your loan, be weary if you're trading in another car and expecting the dealer to pay off the existing loan on it, in exchange for setting you up with a new vehicle and a new loan. Should the car company go under before making this payment, or simply delay paying it off, the debt is still in your name - meaning you have both the old debt and the new debt eating at your credit history.

Make Sure You Can Afford a Loan
While getting a car loan isn't impossible, you'll need to have a good credit history, stable job, and be able to prove that you can afford to make the payments. It's a tough financial world out there, so only proceed with taking on more debt if you are confident in your financial position.

Looking for more information on car finance in New Zealand? Check out the NZS.com directory.

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Motoring images from Flickr: Jeep Dealership, Traffic Lights and Motorway.