Best car loans

We bring together some of New Zealand’s best car loans with the lowest rates to make finding finance for your next vehicle easier.

Home > Car finance
Updated: 31 May 2024

In summary

  • Compare car loans from several different lenders to get the best deal.
  • Be wary of advertised rates — those will only apply to those in the best possible financial circumstances.
  • If you’re looking for business vehicle finance, see our guide.

Author: Kevin McHugh, Head of Publishing at Banked.

Compare car loans

Use our comparison table to find the right car loan for you. Assess loans by advertised interest, terms, and establishment fees.

Both secured and unsecured loans are covered here, but remember that secured loans have lower interest rates.

Lender Interest rate (p.a.) Loan types Terms Establishment fee
Finly logo Finly car loans From 8.25% Secured 1 to 7 years From $205

Nectar logo Nectar 11.95% - 29.95% Unsecured 6 months to 5 years $240 Nectar review
Carfinance2U logo CarFinance2U From 8.95% Secured and unsecured 1 to 8 years From $295 to $995
MTF Finance logo MTF Finance 11.70% to 24.20% Secured and unsecured 3 months to 5 years Up to $380
cooperative-bank-logo-200x100 The Co-operative Bank 9.95% to 19.99% Unsecured 6 months to 5 years $155
ANZ logo ANZ 13.90% Unsecured 6 months to 7 years $0
Harmoney logo Harmoney 9.89% to 24.99% Secured and unsecured 3 to 7 years $150

6 ways to get the best car loan

Car loans

Arm yourself with the the information you need to get the best possible finance deal for your circumstances.

Settle on how much you want to spend

Decide on how much you want to spend on a car and the time period over which you want to be making repayments. 

If you start car shopping first, you could convince yourself to spend more than you can afford. A car loan is something you will be paying off over a few years so it’s important you don’t overstretch and commit to an amount you will struggle to pay off.

Having a maximum amount you are willing to spend in mind can also put you in a stronger position when you’re at the car dealership. Being prepared to walk away from negotiations because a dealership is reluctant to meet your price is a powerful way to get concessions on a price.

Know your credit score 

Your credit score plays a major role in deciding what interest rate you get on your car loan. If you know what yours is, you will have a better understanding of what interest rate you can expect or if you will have difficulty getting a loan.

Having this knowledge can also be helpful when it comes to negotiating a rate. If you know you have a great credit score you also know you should be getting a lower rate on your car loan. 

You can check your credit score for free at Centrix, illion, or Equifax.

Compare a range of options

Get quotes from different lenders to find out who can offer you the best interest rate on your loan. This is possibly the most useful tip we can provide when it comes to looking for a loan.

It may be easy to go into a car dealership and accept the car finance package they can provide through their lender, but it’s unlikely that this will be best option for you.

The dealership will almost certainly be incentivised to push a particular loan on you, even if it’s not in your best interests. Learn more about the pros and cons of arranging finance through a lender vs a dealership in our guide to car finance.

Be sure to check the fees involved, especially ones that might be unavoidable like an establishment fee, broker fee, or service fee.

If you do a little homework and get a quotes from a few lenders you will almost certainly be better off.

Use the car as collateral

Loans that use the car you’re purchasing as collateral (a “secured” loan) have lower interest rates than unsecured loans. Why? Because they involve less risk to the lender.

If you fail to make repayments on a secured loan, the lender can repossess the vehicle to claim back what they are owed. This is not possible with an unsecured loan (but note that they can still take steps, including legal action, if you fail to make repayments to an unsecured loan).

Choosing a secured loan will result a lower interest rate and it’s the most common type of car loan for this reason.

Save up a deposit

The more of a deposit you have, the less you will have to pay back on your loan and you can choose to pay off the loan over a shorter time period.

A large deposit also makes you’re less of a risk to a lender, which means you will have a higher chance of being approved for the loan you need. Once again, you will also be in a stronger bargaining position with the lender as you have proven ability to effectively manage your money.

Choose the shortest repayment term possible

The shorter the loan term, the less you will pay in interest overall. 

For example, let’s say you have a choice of a loan with a 36-month term and another with a 60-month term, both loans involve borrowing the same amount and at the same interest rate.

Even though your monthly repayments will be lower with the 60-month option, you’re taking longer to pay off the total amount. This means that the amount you borrowed has more time to accumulate interest, meaning you pay more in interest over the course of the loan.

This means that choosing the shortest possible loan term (while ensuring you can comfortably meet the repayments) is the smartest choice for many people.

What to watch out for

  • Advertised interest rates: Lenders advertise the lowest interest rates they can offer, but these will only apply to those in the best financial circumstances (excellent credit, a good regular income, collateral that can be used as security, and so on). Bear in mind that the advertised interest rate is not necessarily the one you will get on a loan.
  • Fees: When looking for a loan it can be easy to be blinded by a low interest rate. It can be as important to look at what fees are involved. In particular, it’s important to look out for:
    • Establishment fees: This is a fee for setting up the loan. They can range from $100 to $1,500.
    • Broker’s fees: A fee a broker might charge for arranging the loan with a lender.
    • Service fees: A regular, ongoing fee that is charged for servicing the loan. For lenders that charge a service fee it can be around $10 per month.
    • Early repayment fee: A fee for paying the loan off before the agreed term ends. It’s important to bear this in mind if you hope to pay the loan off early.
  • Balloon payments: A balloon payment is a large, one-off payment at the end of a loan. Loans with balloon payments can seem appealing as they have fewer total repayments, but the large amount at the end can catch borrowers off guard if they are not prepared.
Picture of Kevin McHugh

Kevin McHugh

Kevin is the founder and Head of Publishing at Banked. With years of experience working in personal finance, insurance, and related areas, Kevin created Banked to help Kiwis make better financial decisions.