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8 September 2021 | By Lending People

Legend or lemon? What to look for when buying a car

In the market for a new car? It’s a big investment, especially if you’re getting a car loan. How do you know if you’re buying a good one? Follow our checklist here.

Shopping for a new car can be pretty exciting, but remember, it’s a big investment. Before you drive into the sunset with your new whip, we recommend asking the following questions:

  1. How much can I really afford?
    When it comes to purchasing a car, be realistic about your budget. Remember, it’s not just the car you’re paying for; it’s fuel (or electricity), on-road costs, insurance and maintenance, not to mention any unforeseen mechanical costs—touch wood!

    If you’re going down the finance route, make sure you understand how much the vehicle loan will cost you in total—you’ll need to do some math. Consider the interest, how long you’ll be paying it off and what your regular repayments will be. If you need some help with that, take our online car loan calculator for a spin here.
  2. Am I getting the best car loan for me?
    If you are choosing to finance your vehicle, it pays to do your homework. Ensure you understand the different types of loans available to ensure you’re getting the one that works best for you. You can read our car loan comparison guide here.

    We work with some of New Zealand’s most trusted lenders. If you’d like to see what kind of terms we can offer you, apply for a loan online. It only takes a few minutes, and you’ll have an initial decision on your application in 60 seconds⁵. Regardless of the outcome, you’re under no obligation to follow through with a loan, and our process won’t affect your credit score. If you want to see how our loan compares, apply here.
  3. Am I getting a good deal?
    Found a car you like? Do some research to see what you should be paying for it. A quick Trade Me search should be pretty informative, as will looking around a few car yards. If it’s second-hand, pay attention to the km's it’s done and the year of the model, as this can significantly influence the price of a car.

    Having a clear idea of the going rate for similar cars will help you compare your options and negotiate with confidence! You got this!
  4. Is it economical at the pump?
    Fuel is an ongoing cost to factor into your budget, so you want to make sure you’re not buying something you can’t afford to run. Right Car is a great website that allows you to search for a car by license plate or make and model to see how the car scores on all sorts of things like carbon emissions, air pollution and, of course, fuel economy.
  5. Is it safe?
    Safety isn’t always top of the priority list when shopping for a car—how often do you have a crash, right? The thing is, if you do, you want to be as protected as possible. Checking the car safety rating is a good start—that’s another thing Right Car can help with. NZTA is another good place to visit, particularly if you’re considering buying a second-hand car. They have a great safety checklist, which you can look at here.
  6. Is it a good fit for my lifestyle?
    A Mini might look cute, but it won’t tow a boat. And, if you’re carting around car seats, prams, and porta cots, a bit of extra room wouldn’t go amiss. Think about how you’re really going to use your car for the foreseeable future, then choose accordingly.
  7. Does it have a WoF?
    Any vehicle sold in New Zealand must have a warrant of fitness that is no more than one month old unless the purchaser (you) puts in writing that you’re happy to buy the car regardless. If you agree to this and something goes wrong with the car, it’s your responsibility.
  8. Am I sure I’m not buying a lemon?
    We all know someone who’s unknowingly purchased a dud—you might have even done it yourself. Save yourself some trouble (and cash) by doing your due diligence. Here are some tips:
  • Buy from a reputable dealer - take what the dealer is saying with a grain of salt
  • Don't be afraid to shop around for the car and the finance
  • Get a professional pre-purchase inspection done
  • Check the mileage
  • Check the WoF
  • Ask about the history of the car, specifically any past faults
  • Find out when it was last serviced and by who
  • Test the shock absorbers
  • Check for smoke from the exhaust
  • Check for oil leaks
  • Protect your investment with insurance
  • Guides & Insights
  • Rates Comparison
  • Home Loan Calculator
  • Personal Loan Calculator

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¹Fees: We do not charge a fee to use our service (commonly referred to as a platform fee, broker fee, or referral fee) if you are an existing customer who has previously entered into a personal loan that we arranged on your behalf; or you do not enter into a personal loan arranged by us. A fee to use our services is applicable in all other cases. See our Terms & Conditions for the applicable fees.

²Annual Interest Rate (AIR): The AIR offered by our Personal Loan providers ranges from 6.95% p.a. to a maximum of 26.95% p.a.

³Annual Percentage Rate (APR): Also known as the 'comparison rate', the APR is calculated by adding together the AIR plus any additional fees that may apply (like establishment fees charged by providers). New Zealand law does not require APR disclosure, but doing so can better highlight borrowing costs. The APR offered by our Personal Loan providers ranges from 7.80% p.a. to a maximum of 27.91% p.a. The APR is accurate only for the representative example given below and may not include all fees like early repayment fees (if any). Different terms, fees or other loan amounts might result in a different APR.

⁴Minimum and Maximum Repayment Terms: Repayment terms offered by our Personal Loan providers range from 12 months to a maximum of 84 months.

Representative Example of the Total Cost of a Loan: If you borrow $20,000 over a repayment term of 36 months at an AIR of 6.95% p.a., your total repayments will be $22,493 (made up of $20,000 principal, interest charges of $2,243, and an establishment fee of $250). This example assumes monthly repayments and does not include premiums for any optional insurances, fees for using our services (if any) or default fees.

⁵Terms and Conditions: Our services are provided in accordance with our Application Terms & Conditions. All approvals are subject to provider credit criteria and responsible lending requirements. The loan amount and interest rate offered will depend on your circumstances, the type of lending required, and the security (if any) provided will reflect the loan amount and interest rate offered by the provider. Provider establishment fees, terms, and conditions apply.