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13 May 2021 | By Lending People

Tips and traps to know before financing your next vehicle.

Must know tips and traps to prepare you for when you’re ready to think about finance options for your new vehicle. See what you could get through our online car loan application.

A loan is a commitment that shouldn’t be taken lightly. So before you make any decisions, have a read of these caveats that are commonly overlooked.

  1. Read the small print to find out exact interest rates and fees: Most loan contracts have other fees in the small print, which come into play in irregular circumstances. These include initial set-up costs, known as loan establishment fees, charges for defaulting on payments and penalties for paying off the loan early, called break fees.
  2. Check on the repayment frequency: Many Kiwi car loans have fixed monthly or weekly payment schedules. If you think you may want the freedom to make extra payments, be sure to check the terms of your agreement.
  3. Don’t forget about any added costs: Cars also need insurance, a WOF and registration, petrol, diesel or electricity, servicing, and sometimes unexpected repairs. All of these are added to the cost of the actual vehicle, so make sure you understand the total cost of car ownership before you go shopping.
  4. Car insurance is important protection: If you have a secured car loan, motor vehicle insurance (MVI) is compulsory. Regardless, protecting yourself and your vehicle with car insurance is the best way to avoid a hefty bill in the unfortunate event of an accident. MVI covers fire, theft and collisions whether it’s your fault or not. In addition, depending on the level of insurance you sign up for, you may also be covered for windscreen repairs, transport, accommodation, and towing costs.
  5. Mechanical breakdown insurance (MBI), also known as a mechanical warranty, is different from MVI but can be just as valuable: Within reason, MBI covers the repair or replacement of mechanical and electrical parts that break down during everyday use. Unlike MVI, the faults don’t have to be caused by accident to make a claim. Policies are available for 12, 24, and 36 months and come with AA’s roadside assistance.

With these tips and traps up your sleeves, you’ll be prepared for when you’re ready to think about finance options for your new whip. See what you could get through our online car loan application. It’s free to apply, and you’ll have your answer in 60 seconds. Our experts are on hand to help you if needed or offer you financial advice.

This blog is provided for general information purposes and is not a recommendation you enter into or exit any particular loans or insurance policies. Information on the blog does not take into account your particular circumstances, including your objectives, financial situation or needs. We recommend you seek advice from a financial adviser before taking any action as appropriate. The Lending People Limited (FSP240365) is a licensed financial advice provider and can provide advice on some types of personal loans, insurance. Find out more about The Lending People and how we may be able to help you.

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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 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 8.95% p.a. to a maximum of 28.95% 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 9.80% p.a. to a maximum of 29.91% 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 8.95% 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.