The Ultimate Guide to Car Loan Interest Rates in New Zealand (2024)

Interest rates vary depending on the lender, loan term, and your financial situation. As of 2024, here’s an overview of average rates: Lender Type Interest Rate Range (p.a.) Major Banks 8.5% – 15.5% Credit Unions 7.9% – 14.9% Finance Companies 9.9% – 19.9% Peer-to-Peer Loans 7.5% – 14.5% Note: Rates fluctuate based on the Official Cash Rate (OCR) set by the Reserve Bank of New Zealand (RBNZ).

Note: Rates fluctuate based on the Official Cash Rate (OCR) set by the Reserve Bank of New Zealand (RBNZ).

Several factors influence the rate you’re offered:

A good credit score (650+) can secure lower rates.

• Poor credit may lead to higher interest or declined applications.

• Shorter terms (1-3 years) usually have lower rates.

• Longer terms (5+ years) may have higher rates but lower repayments.

• A larger deposit reduces risk for lenders, potentially lowering rates.

• Smaller loans may have higher rates due to fixed admin costs.

• New cars often get better rates (6.5% – 12%).

• Used cars may have higher rates (9% – 20%) due to depreciation risk.

• Fixed rates stay the same for the loan term (predictable repayments).

• Variable rates can change with market conditions (risk of increases).

✅ Check and Improve Your Credit Score

• Get a free credit report from Credit Simple or Centrix.

• Pay bills on time and reduce existing debt to boost your score.

✅ Compare Lenders

• Banks, credit unions, and online lenders offer different rates.

• Use Simplify.co.nz to compare multiple loan options instantly.

✅ Negotiate the Rate

• Some lenders may offer discounts for strong applicants.

• Mention competing offers to leverage a better deal.

✅ Opt for a Shorter Loan Term

• A 3-year loan will cost less in interest than a 5-year loan.

✅ Consider a Secured Loan

• Using the car as collateral can lower your rate.

Besides interest, watch for: • Establishment fees (100–100–400)

• Early repayment penalties (some lenders charge fees)

• Monthly account-keeping fees (5–5–15) Always read the loan agreement carefully before signing.

If traditional car loans have high rates, consider:

• Personal loans (may have lower rates for good credit).

• Dealer finance (sometimes offers low promotional rates).

• Peer-to-peer lending (competitive rates for some borrowers).

✅ Get pre-approved to know your budget before car shopping.

✅ Avoid stretching your loan term too long—it increases total interest.

✅ Use a car loan calculator (like Simplify’s) to estimate repayments.