Posted in Loan Rates, Vehicle Loan Help

Understanding Vehicle Loan Rates


Understanding vehicle loan rates

Owning a vehicle in New Zealand is easy. There are lots of options for you to choose from depending on your financial ability, such as buying by cash, seeking an auto loan or even trade-in if you want an upgrade. Before attempting to borrow money to buy a car, you need to understand vehicle loan rates in New Zealand.

Vehicle loans Interest rates nz
Vehicle loan Interest rates nz

Vehicle Loan Rates

A vehicle loan is a form of credit given to a borrower by a car dealer or financial institution to buy a car. The car may be new or used.
Vehicle loan rates are the fees charged to a debtor for borrowing money. The vehicle loan interest rates here in New Zealand vary. It is wise to do thorough research so that you get the lowest and the best vehicle loan rates possible.

How is the vehicle loan calculated?

An automobile loan calculator is used to estimate the amount of money you will be paying for the loan. Whether weekly, bi-weekly or monthly depending on your preference. You key in the amount of money you intend to borrow, the duration of borrowing (in months), and the interest rate.

Please note that the car loan calculator will only give you an estimated figure. The vehicle loan calculator does not consider some charges which affect the overall amount paid at by the end of loan term. These charges include taxes, documentation fees and registration fees.

How is the vehicle loan calculated?

Understanding Vehicle Loan Rates for New and Used Cars

Used vehicle loan rates

Used vehicle loan rates: are rates charged on loan given to an individual seeking to buy a used car. The amount of the money financed is usually lower, but this is not always an advantage to the borrower.

The interest rates charged for vehicles on used car loans are very high.  Used cars are considered to be a liability to the financier. Due to their high maintenance attracted by frequent breakdowns and the need for spares. It is likely to be very expensive for the debtor and may cause them to default altogether.

For this reason, the lender will charge high vehicle loan rates on the used cars to cover themselves. Lenders in New Zealand usually prefer to give 2 or 3 years on used vehicles, and some can give up to 5 years but not more than that.

New vehicle loan rates

New vehicle loan rates: are rates offered on loan to buy a new vehicle. While the amount of money borrowed may be higher, the new cars are less of a liability to the lender as the new cars have 2 or 3 years of warranty.

It covers the lender from the risk of losses as in case of default, as they can sell the vehicle and recover the amount owed. For this reason, the vehicle loan rates charged on new vehicle loans is lower compared to the used one.

New Vehicle Loans

Factors that affect vehicle loan interest rates:


Factors that affect vehicle loan interest rates:

Loan term: this is the duration the loan tenure will last. Usually counted in months. Longer term attracts higher interest rates for vehicle loans.
Loan amount: this is the amount being borrowed to purchase a car. The more the loan, the higher the vehicle loan interest rates. If your loan amount is high, it is advisable to pay a substantial down payment to bring down the loan amount.
Credit score: the higher your credit score, the better chances for you to get lower interest rates for the vehicle loan.

Tips to getting lower interest rates for vehicle loans:

Research: various lenders in New Zealand offer different interest rates for vehicle loans. Doing research can help you land low-interest rates for vehicle loan hence saving you money.
Down payment: settling a substantial amount of money as down payment reduces your overall vehicle loan rates on borrowed amount and the monthly payments.
Take short-term loans: Short loan period attracts high installments, but in the long run, saves you a lot of money.

Vehicle Loan NZ

How to ensure you get the best deal.

The best and easiest way is to check the total cost of the loan. You will achieve this by adding establishment fees + origination (broker/dealer) fees + total payments + termination fees (if any). This sum will give you the total amount of money you will have paid at the end of the loan tenure.

Make comparison for three or four lenders and the one with the lowest figure will be the cheapest and the best.

Vehicle loan rates in New Zealand

Vehicle loan rates in New Zealand can be very affordable and manageable; all you need to do is find the right lender to lend you the money. Now that you have vast knowledge on vehicle loan rates, you are ready to start shopping. Good luck!